FT: Investors urged to beware of Sipps property hype

Investors hoping to make quick riches from new rules that will allow them to put residential property in their personal pensions are being urged to take a reality check and be wary of getting caught in property stings.

These cautionary words come as pensions providers report worrying approaches from some in the property industry keen to ride the wave of interest in the new regime which risks creating a property bonanza here and overseas.

From April next year, under the new regime referred to as “A-Day”, the range of permitted investments in a self-invested personal pension (Sipp) will expand to include a number of new asset classes such as wine or antiques. But what is really attracting investor interest is residential property. The new freedoms could attract hordes of buy-to-let investors to pensions, enabling them to receive income tax relief of up to 40 per cent on buy-to-let investments sheltered in their pensions.

With less than six months before A-Day, there has been an explosion in the number of websites marketing property investment opportunities and Sipps, particularly in countries popular with British investors, such as Spain and Florida. Now Sipp providers say they are being inundated with unsolicited approaches from many property companies and investors keen to get on the Sipps bandwagon.

“We have had some e-mails from companies with odd sounding names saying they are specialists in a certain area and wanting to offer our clients the benefits of their property services in Bulgaria or wherever,”

says David Baker, director of James Hay, the UK’s largest Sipp provider.

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Source: Finantial Times Europe