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Gordon Brown scuppers Property SIPPS |
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Tuesday, 06 December 2005 |
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The Chancellor’s pre-Budget statement yesterday halted a controversial tax break that the property industry believed would spark significant investment in buy-to-let and holiday homes. Direct property investment through SIPPs has been heavily promoted throughout much of 2005 and experts believed there would be significant interest in the opportunity from 6 April 2006 (A Day). The Royal Institute of Chartered Surveyors had estimated that 50,000 properties, worth around £24bn, would be switched into SIPPs over the next few years.
SIPP investors who still want to invest money into residential property from “A Day” will now only be able to do so through approved pooled funds. If you have a frozen pension or SIPP and need to know what your options are now, best you
Many people have been looking forward to the opportunities that they imagined 6 April 2006 would present them with. In the light of yesterday’s announcement, plans for direct property investment will need to be hastily revised and people will be looking for alternative ways to invest their money. The Treasury says it decided to act against direct investment after it became clear that the scale of tax avoidance became clear.
Pooled funds offer the benefits of property investment but without the hassle that direct ownership usually brings. We have a European property fund that allows investors with the means to access the property ladder at lower initial costs and in markets that have far greater growth potential than the UK.
We have access to the first FSA authorised fund to include residential property in its investment strategy. It will invest in the buoyant residential property markets including Spain and Germany, as well as emerging markets such as Croatia, Greece and Turkey. The key features of the fund are:
• It primarily seeks to invest in European residential property.
• Investments will comprise a mixture of developments under construction and completed properties that derive an income (a maximum of 50% and 30% respectively, in line with OEIC rules). At least 20% of assets will be kept in cash to ensure liquidity.
• It is the first FSA authorised property fund to include residential property in their investment strategy.
• The minimum investment is £5,000.
• It aims to deliver a pre-tax investment return of 8% or more per annum, over the medium term.
• SIPP investors can gear their investment in the OEIC by 50% come pension ‘A day’ next April, 2006.
Savills will be the independent property valuer to the fund and the Bank of New York Depositary Company will act as the Depository and be responsible for the security of the Fund assets. In addition, Medsea Estates Group Ltd, the AIM listed property agent, is engaged to source investment opportunities as well as providing distribution (of completed properties) though its network of agents in the UK (450 agents), Spain, The Netherlands, Germany and the Nordics.
For more information on this fund or the options you have with your pension fund now and post A Day contact us today for a full appraisal without obligation.
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