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27 Mar 2013

Government May Allow SIPPs To Hold Residential Property

The UK government plans to simplify rules related to assets held in self-invested personal pensions (SIPPs) and may soon allow the conversion of unused commercial properties for residential use by pension investors in their funds should Budget proposals be given the go-ahead.

At present, SIPPs allow investors to make their own investment decisions by choosing from a pool of investments, which does not include residential property. Now the government is exploring ways to relax the rules and will consider whether the conversion of unutilised space in commercial properties in town centres to residential use could be encouraged by Investment Regulated Pensions Schemes legislation, the document outlining the 2013 budget proposals showed.

Allowing savers running their own pension funds to invest in residential property is expected to be met with a positive response from investors, the Financial Times said. Seven years ago, the government had a similar idea to give investors the chance to put residential property into pension funds, but eventually scrapped it due to doubts that the move could have meant that more investors took advantage of the chance to buy second homes overseas.

Such a change would underpin investors´ willingness to invest in residential property and will also stimulate the conversion of empty commercial properties, Christine Ross of SGPB Hambros commented. Andrew Roberts, partner of SIPP provider Barnett Waddingham, also welcomed the move, saying that it would help reduce the red tape which currently states that schemes such as SIPPs are obliged to sell on properties before they become habitable.

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