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Budget 2013: Sipp providers welcome residential property move
by William Robins on Mar 20, 2013 at 16:33
Sipp providers have welcomed the government's announcement that it will consult on allowing pensions to invest in some residential properties.
The consultation will cover whether residential property, created by the conversion of unused space in commercial properties, would be allowed. Currently pensions are not allowed to invest in residential property without incurring a tax charge.
The Treasury said in Budget documents: ‘The government will explore with interested parties whether the conversion of unused space in commercial properties in high streets and town centres to residential use could be encouraged by amending investment regulated pensions schemes rules. Any amendments would need to be consistent with sound public ﬁnances and the government’s wider pensions strategy.'
Andrew Roberts (pictured), partner at Sipp and SSAS provider Barnet Waddingham, said the move would cut 'unnecessary red tape' for Sipps and SSASs investing in commercial property.
'Opening up pension investment rules to allow commercial properties to be developed into residential would reduce unnecessary red tape that plagues such projects at the moment - current rules require Sipps to sell on developments before they become habitable - and so would be good for the property and pension sector.
“I would suggest a simple test such that pensions can own converted properties but have to dispose of them before they are leased out, and that members cannot occupy them. A clear statement should be made on whether a series of developments would constitute a trading activity, which is taxable even within a pension wrapper.'
Robert Graves, head of pensions technical services at fellow Sipp and SSAS provider Rowanmoor, also welcomed the move. 'It will be interesting to see how this will tie in with the FSA's plans to treat property investment as a non-standard asset incurring higher capital adequacy,' he added.
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