Final Salary Pension - transfer and buy residential property?

roger56 · 19 May 2005 at 12:11PM

Found this interesting article about proposed changes to Final Salary Pension transfer value calculations:

http://news.ft.com/cms/s/d950fa3e-c3cb-11d9-a56d-00000e2511c8.html

Suggests rules may be changed to allow investment in residential property via a SIPP. (Currently I believe only commercial properties can be used).

Any comments?

sneekymum · 29 May 2005 at 12:02AM

Buy to Let is such a lot of hassle! I can't imagine anyone wanting to get into it in their old age. There are so many hours spent dealing with advertising, repair, maintenance, decorating, blocked drains, filling in insurance froms - getting quotes in the first place...etc - that you might as well get a second job - at leat you'd know what your hours and earnings would be.

Yes Commercial Properties can currently be used in pensions and these have the advantage of being free from capital gains tax, with rent coming in (into a tax free growth fund if there's no mortgage) free from income tax and the icing on the cake is if you are the tennent in a business capacity your company can pay rent to your pension as a business expense. If you're not tennent material yourself (why not start a small part-time business) just consider the difference between the sort of tennents you get in residential and commercial rented property! Residential tennents can inflict a lot of wear and tear and then be gone - Commercial tennents tend to be much longer term and if the place is seen by the public they take good care of it.

I think Property Funds are the way to go e.g. New Star Property Fund (bought via Cavendish Online of course).

dunstonh · 29 May 2005 at 11:14AM

There are concerns that property in pensions could lead to potential problems. Certainly wealthy people will be ideal for this arrangement. However, those with limited capital reserves may be attracted to this but not be in a position to fund it over the long term (with the ups and downs - downs being being the main concern). With the capital being locked in the pension, they wont be able to use it to get themselves out of trouble.

Property funds are the less hassle way of doing it. Personally, I prefer the NU/Morley property fund to the new star property fund. New Star is virtually all in central london. One visit from Mr Bin Laden and the New Star property fund is decimated. NU/Morley has almost identical performance but is in property all over the UK.

EdInvestor · 29 May 2005 at 11:39AM

The offshore commercial property trusts run by the big life companies Scottish Widows, (UBR) Std Life (SLI, Friends Prov and F&C are also worth a look IMHO.They are listed on the stock exchange so you buy and sell them like a share.Most of them have diversified portfolios - offices shopping centres industrial parks - though I believe Std Life is about to launch some new ones that split the property up by sector.

sneekymum · 29 May 2005 at 4:32PM

I like the way this thread has mutated from residential property in pensions to commercial property funds -

Final Salary Pension - transfer and buy residential property?

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