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Budget 13: Govt looks to allow pension investment in residential conversions

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The Government is considering changing investment rules to allow pension schemes to invest in unused space in commercial properties which may be converted for residential use.

If the Government went ahead with the change it would mean pension schemes would be able to invest directly in residential property for the first time.

This follows Government moves to allow developers to convert commercial premises for residential use.

The Budget says: “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.”

You can also follow Money Marketing’s live Budget coverage through twitter and the Budget 2013 section of our website. Our expert panel has joined the MM editorial team to provide comment and analysis on today’s big news. Look out for our Budget special newspaper edition out tomorrow and watch our live analysis of what the Budget means for your clients tomorrow at 11am here.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Bad press reporting.

    The heading on the email link is suggesting the Govt is going to allow this investment, read deeper. MM please don’t use inappropriate headings, say it as it is not as some people would like as a headline.

  2. As usual this really good idea will attracted a lot of negativity.

    Why should’nt a family group or group of business partners not be able to pool their SIPP assets and us it to renovate a run down row of shops into flats or an old warehouse into homes?

    Why could they not develop these into student flats?

    Why should’nt they be allowed to lease these to connected parties provided a commercial rent is paid?

    Whilst about it why not restore the pre-A day SIPP borrowing limits to really encourage pensions to invest in homes?

    Many SIPP members are cheesed off with equity markets and funds which they see as being volatile, risky, manipualted by short sellers etc and would love to invest in the stable returns of residential property.

    The vested interests of fund managers would love to kybosh this idea as thousands will flood out of poor performing funds.

    Also this would encorage pension saving as opposed to ISAs something the fund managers would like too.

  3. Francis J Underwood 20th March 2013 at 5:47 pm

    @ Anon 5:02

    Why? – Well one would not be allowed the number of characters needed in order to adequately respond, but one would have thought it obvious why..not.

    Are many SIPP members cheesed off with equity markets? Really? Which markets? Over what time scale? The solution to that kind of thinking is not yet more asset class / sector picking [guessing].

    Do the right planning job by your clients, SIPP members or otherwise, and they wont be ‘cheesed’ off with equity markets they will instead understand the important role that equity markets play and will adopt a pragmatic approach to the subject.

  4. Anonymous | 20 Mar 2013 5:02 pm

    What stable returns of residential property – are you talking about the stable residential property market that the government is intervening in?

  5. Yes, agreed. Let we forget that it was a property bubble based upon a dubious change to lending criteria, the assumption that ‘never goes down’ and the greed, stupidity etc that had brought the worlds economies to their knees.

    No to residential property via pension however ‘remote’. This is the reason our sons and daughters cannot afford a home without parental or now, taxpayer help.

    Just live in the bloody things!

  6. I could never understand the governments stance on property investment, if it is OK for a pension property fund to invest in a shopping centre, why is not OK for a pension fund to invest in a commercially let (BTL) residential property

    I realise that there are some dodges applicable to this, but as long as the residential property does not come into Private ownership as a Principal Private Residence, what’s the issue that seems to concern bloggers here?

    We ned more rented properties for the next generation because they will certainly not be able to afford to buy until well into their thirties and beyond.

    We bought our first two bed terrraced house for £2100 in 1975 and it now retails at around £100K plus. I wish I had held on to it instead of moving into a detached property some years later.

    Would have made a packet (less CGT of course)

  7. Thanks for the positive unemotional comment Ned.

    I agree we need more social housing and cannot see any reason why pension funds cannot be used to provide this either on a grand occupational pension scale or via individual SIPP.

    Indeed why can’t NEST have a social housing fund?

    After the war the Germans saw the opportunity to use pension funds to rebuild their social housing so why can’t we employ the same strategy.

    Seems eminately sensible.

    I suspect the negativity is coming from vested interests.

    Many IFAs, fund managers etc whose business models are based on assets under management on platforms earning a nice annual percentage will not relish dozens of SIPP clients turning up and saying I’d like to take money off the platform and invest in residential property.

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