James Hay plea for Sipp property rules to be eased

The James Hay Partnership has written to Prime Minister David Cameron urging the Government to reinstate more flexible rules governing Sipp investments in commercial property.

In the 2004 Budget, Chancellor Gordon Brown changed the borrowing limit for pension schemes investing in commercial property from 75 per cent of the property value to 50 per cent of the pension fund value.

This reduced the gearing ratio on property investments from 75 per cent to 33 per cent.

James Hay business development director Richard Mattison says that, under the old rules, a person with £25,000 could borrow £75,000 to buy a property, but under the current rules the same person could borrow just £12,500.

Mattison says: “Reinstating the old rules on commercial property investments would encourage people to save for their retirement, boost the commercial property market and encourage bank lending. The Government has a chance to do something positive here.”

Informed Choice managing director Martin Bamford says: “I would support this change and I think it fits in with the Government’s agenda for growth. Anything that will encourage increased transactions in commercial property has got to be a good thing.”