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Sipp investors planning to move into buy to let

Two-thirds of Sipp investors plan to use the pension wrapper to buy residential property, according to a survey of Sippdeal users.

Sixty per cent favour UK property and 56 per cent are looking at buy-to-let investments, with just 15 per cent likely to put their own main residence into a Sipp.

The research shows 29 per cent are looking at putting European properties into Sipps while 10 per cent are considering other countries. To fund this, 84 per cent say they are certain or likely to borrow money, with only 5 per cent planning to buy outright and the balance undecided.

However, Sippdeal parent firm AJ Bell managing director Andy Bell does not expect foreign property investment to take off because of the cost and difficulties for providers in administering them.

The research, which covers the views of a total of 1,650 Sipp investors, reveals a significant amount of confusion over the requirement to pay rent at the going market rate for properties held in a Sipp or face an equivalent tax levy as a benefit in kind. The biggest group – 43 per cent – are unsure what they will do, with 35 per cent set to pay rent, 3 per cent say they will pay tax and 19 per cent believe it is not applicable to them.

Bell says: “I do not think the overseas angle will take off. It will be too complex and expensive for the typical Sipp investor. The majority of business actually transacted will be UK-based. Our Sipp investors have spoken and confirmed that A-Day could be a bigger bang than many of us ever believed.”

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