City Trustees - part of Mattioli Woods



News and Media

22 March 2013

Budget 2013 reveals that SIPPs may be allowed to hold residential property

In the 2013 Budget, Chancellor of the Exchequer, George Osbourne, revealed that the Government are considering a relaxation of the rules to allow unused commercial property to be converted to residential use within a self-invested personal pension (SIPP).

Being at the forefront of the SIPP marketplace since 1995, Mattioli Woods welcomes an indication that changes in pension legislation may allow investment into property conversions, but with caution.

Murray Smith, Group Director, said: "We are mindful that this is not the first time that residential property has reared its head. The draft version of new Labour's radical pension changes in 2005 stated that residential property was to be a permitted asset within a SSAS or SIPP.

"At the time significant interest, and indeed planning, had been generated by the prospect of investing in residential property. However, a last minute change was made by the Former Chancellor, Gordon Brown, which removed controlling ownership of residential property as a viable option under the current rules."

Currently, properties which could be purchased through a SIPP include commercial property and land, as well as residential property which is up to the point of becoming suitable for use as a dwelling. This is includes hotels (although there are specific rules regarding hotel rooms), care homes, residential property with commercial use, such as a shop with a flat above (unconnected manager of shop only to occupy the flat), halls of residence and finally prisons.

Murray Smith, adds: "Over the last few years, we have seen an increase in land purchase and subsequent property development, all within the remit of the existing rules. The exploration into the conversion of unused space in commercial properties in high streets and town centres to residential would be a welcome extension, however consideration will need to be given to avoid residential investment that does not deliver good pension scheme returns. We will therefore await the results of the review with interest."

 

< Back to News

 

City Trustees is a trading name of Mattioli Woods plc. For news updates on the Group, please visit our central News & Media on the Group website.