In an unexpected announcement, the Government has decided to explore with interested parties whether the conversion of unused space in commercial properties in high streets and town centres to residential use could be allowed within pension schemes.
At present, only commercial property can be held tax-free in both self-invested personal pensions (SIPPs) and small self-administered schemes (SSASs).
With an ever-increasing supply of unoccupied commercial properties, including shops, office and public houses, interestingly, there are quite a number of "commercial to residential" projects at various stages of completion. But current legislation makes the process fraught with red tape.
As pension schemes are hit with a major tax penalty if they hold residential property, the developments have to be sold on prior to them becoming habitable. But as there isn't a formal set of rules which confirms the exact point at which this occurs, it's difficult to know whether the development has gone a step too far, leading to dire financial consequences for the pension scheme.
If the consultation process reveals there is an appetite for this change, it could bring a number of valuable benefits.
It could breathe new life into some of Britain's formerly vibrant and interesting high streets and town centres. It would certainly meet conclusions drawn by The Portas Review.
It could kick-start the property market, providing a valuable boost to house prices. And it could open up new and interesting rental opportunities right in the heart of communities.
For pension investors, it could provide a worthwhile alternative to stock market investment, which continues to suffer significant volatility as Britain, Europe and the world rocks from one financial crisis to the next.
In fact, it could encourage many pension holders to restart their contributions to enable their pension funds to acquire property. Given the recent reductions in State pension benefits, with a complete overhaul due to take place in 2016, there's never been a more important time for people to provide for their retirement.
Perfectly placed to add value to the Government's consultation process is SIPPclub. It has just launched a one month campaign to canvas the opinions of all interested parties. This includes investors, advisers, property professionals and pension scheme operators. The campaign conclusions will be presented to The Treasury and they will be made available to the public.
We're keen to support the consultation process. To ensure the Government obtains the views of the largest number of people, we kindly ask you to give your opinion about this matter using the form below.
The campaign is being run and co-ordinated by SIPPclub.
- Wednesday 24 April 2013