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02 Oct 2013

Property Investment Through Sipps Explored

Adding property as an asset for self-invested personal pensions (Sipps) is not unusual, and is already a common practice among investors. However, property has been brought into the spotlight recently for two reasons: the proposed definition of commercial property as a non-standard asset, and the news that the government was considering to allow residential property into Sipps.

According to FT Adviser, property is an asset that is to be taken into consideration because of its staying power. If the Financial Conduct Authority (FCA) includes commercial property as a non-standard asset, the effect on providers and investors may be dramatic. The regulator believes that commercial property should be included as a non-standard asset because of its illiquid status, which makes it harder to transfer or sell if needed. However, providers argue that despite being illiquid, property is more resistant to fraud when compared to other assets. The final decision will be made after the regulator has completed its consultation on the matter.

Meanwhile, having residential property included in Sipps is in its very early stages, but the response from the industry has been positive, FT Adviser said. However, the industry also wants to see proper safeguards put in place, such as a ban on using the property as a home, and only allowing the option of buy-to-let. The government is still to make a decision, with no indication of when the results will be released, the news source said.

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