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Jupiter urges rethink on Sipp limit for commercial properties

Jupiter is calling on Chancellor Gordon Brown to recon-sider the borrowing limits on commercial properties in Sipps following the U-turn on residential properties in his pre-Budget report.

Pensions development manager Jamie Fergusson says legitimate commercial prop-erty buyers could be disadvantaged after A-Day if the Inland Revenue does not change permitted borrowing levels back from 50 per cent of the pension fund value to 75 per cent of the property value.

The restriction in borrowing levels was assumed to have been made in anticipation of allowing residential properties into Sipps.

Before A-Day, a fund size of 100,000 with a mortgage of 300,000 could expect a maximum property value of 400,000. After A-Day, the mortgage available is red- uced to 50,000, creating a maximum property value of 150,000.

Fergusson says: “The fact that Brown did not review the lending values for commercial property within a Sipp is probably an oversight but if he does not change the borrowing for legitimate commercial prop-erty purchasers, they could be left considerably disadvantaged after A-Day.”

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