Sipp providers have cautiously welcomed Government proposals to allow pension funds to invest in commercial property that is converted for residential use.
However experts have warned policymakers any new rules will need to be “tightly drawn” to prevent abuse by investors.
Last week’s Budget revealed the Government is considering changing investment rules so pension money can be used to convert commercial properties for residential use as part of efforts to reinvigorate Britain’s high streets.
Suffolk Life head of marketing Greg Kingston says: “The Government already said no to residential property outright in 2005 and I do not think there is any appetite to return to that.
“We still need more detail on how this will work and there is a question about whether or not you will be able to keep the property in your Sipp once it becomes residential. But if this can be made to work I think Sipp providers will embrace it.”
James Hay head of technical support Neil MacGillivray says: “In theory this sounds like a good idea but given the complexity that surrounds commercial property investments it is not clear how it will work.
“There is also the risk it will be abused and if the Government wants to protect against that the whole thing could become so restrictive and complex that it will be a non starter.”
Dentons Pension Management director of technical services Martin Tilley says: “Any proposals and subsequent legislation would need to be tightly drawn to prevent misinterpretation and potential abuse by occupation of parties connected with the pension member.
“It is surprising that the Government is looking to widen the investment opportunities with self invested pensions at the same time that the FSA is looking to ensure inappropriate assets are not accepted into the pensions regime.”