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IPS wants return of 75% Sipp property borrowing

Mattison
Mattison: ‘Reinstate limit’

Sipp provider IPS Partnership is lobbying the Government to revert Sipp borrowing rules back to allow a maximum of 75 per cent of the value of their commercial property investment.

Sipp investors could previously borrow 75 per cent of the property value but this was restricted to a maximum of 50 per cent of their fund value in April 2006.

IPS says the move was a reaction to fears that allowing Sipps to invest in residential property would lead to an overheated property market. But plans to allow residential property did not go ahead and the property market has since seen a correction, with commercial lending becoming constrained.

Business development director Rich-ard Mattison says 75 per cent borrowing was a popular yet low-risk approach to retirement savings. He says: “There is now no legitimate reason for not reinstating the previous limit on pension scheme borrowing. A change in the rules would provide a much needed stimulus to the property market and give a boost to retirement savings.”

But Standard Life head of pensions policy John Lawson says: “This increases the gearing and therefore the risk to the pension scheme that if the property falls in value it could be in negative equity.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Commercial property fluctuations – I cant see many of IPS SIPP clients would ultimately thank them for a negative equity retirement

  2. This is a non-story. Cheap publicity for IPS.

    I would be suprised if the Government even respond to this request!

  3. Regarding the point about negative equity I’d forgotten how client’s share portfolios had prospered over the last ten years.
    If the property has a tenant, negative equity is a non-issue and based on an attractive rental yield, However of course investment in commercial property doesn’t pay commission.

  4. the 75% rule should be reintroduced if the limit to conts is going to be £50000 property is a sound investment and i hope the powers listen to the argument

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