Origen says an increasing number of its professional clients want to use group Sipps to purchase commercial property.
The firm says a range of professionals including company directors, solicitors and accountants have asked to buy a property, often to lease to their own business or as an investment leased to a third party.
A-Day changes to borrowing rules in Sipps from April 2006 make it harder to purchase commercial property via an individual arrangement. Previously, Sipps could borrow up to 75 per cent of the purchase price and would only need 25 per cent available as a deposit. The maximum borrowing has now reduced to 50 per cent of the existing fund value.
Origen says these changes have made buying through a group Sipp, where more than one person’s pension benefits can be pooled to purchase an asset, a more viable option.
Head of self-administered pensions Claire Court says there are other advantages, including only having to deal with one Sipp administrator and the property growing free of income tax and capital gains tax.
But she warns those using a group Sipp to purchase a property need to be aware that these investments are illiquid and may take time to sell. She says: “This is particularly relevant when one member wants to sell his share of the property and the others do not.”
Facts and Figures managing director Simon Webster says: “We have seen rising interest since A-Day, even though before the legislation coming in, it was possible to string individual Sipps together to buy a commercial property. The main interest has come from professionals looking to buy their own premises because they are more switched on to opportunities.”