A SIPP is a Self-Invested Personal Pension for which UK residents, investing for retirement, decides what their pension fund is invested in. Traditionally pensions are managed by a pension fund manager who will decide where to invest the client’s funds. Investing via a SIPP can give the investor the flexibility to manage their own fund by choosing their investments.
The SIPP provides a wrapper and enables the holder to have a number of different investments to take as pension benefits when they retire. As with any pension fund, the investor cannot take money from the fund until age 55.
There are several SIPP approved overseas property resorts, allowing property investors to use their personal pensions to invest in an overseas property.
What type of investments can be included in a SIPP?
A variety of investments can be held within a SIPP, for example, commercial property, Government securities, stocks and shares and unit trusts.
Which overseas properties are considered suitable for SIPP investment?
Typically they are part of a hotel resort and therefore the property investment is classified as a commercial purchase under HMRC Guidelines.
Are there any exclusions when purchasing via a SIPP?
The property investor is not able to utilise the property for personal gain and is therefore not entitled to the 30 days free usage per year.
Where can I get advice on a SIPP?
Advice on a SIPP must be sought from a pension specialist working for a firm authorised and regulated by the Financial Services Authority.
For more information about SIPP compliant properties, contact International Luxury Real Estate.
Regardless of the reasons, I think there are three items which do not bode well for commercial real estate prices in the next few years. First and perhaps most overlooked, investment or income producing properties, during the boom years, where purchased more for appreciation, rather than “income”. In other words, many deals were justified by investors who were willing to forego a rate of return (income), for future price appreciation. But as its name suggests, this is not what “income producing property” is all about. If it doesn’t give you an income stream in good times, it sure won’t be able to in bad ones. Only a “flipper” can make money on appreciation, and the trick is to know when to get in and when to get out. Second, the credit crisis has reduced the chances of obtaining loans, and also the leverage previously afforded owners/purchasers. Less money means less deals, and more cash out of pocket. This can only lead to lower prices. Third, we are for now in a “new” economy (although Americans often prove to be driven by fads and can be short sighted), where we will consume less, which should mean less need for commercial space. If there is one truth that history makes clear over and over again, it’s that most sectors of the economy will move in conjunction with one another, not in spite of one another. No doubt prices are tied to supply and demand issues, but too much of a swing invites change. So when prices double and triple in one sector while the rest of the economy isn’t going in that direction, chances are some force will snap that imbalance back into its proper place in the overall economy. And that change can be from social, economic, and/or political means.