Pension reforms impact commercial property investment

SIPPS become more attractive since April 2015

22 July 2015
  • Penarth Road Retail Park

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New pension reforms that were introduced in April 2015 have resulted in more pensioners investing in commercial high street properties via a Self-Invested Personal Pension (SIPP). The changes mean that it is individuals with defined contribution schemes can more easily withdraw funds from their pot as a lump sum, with the first 25% tax free. As a result, more people are now investigating the potential of investing this money to provide them with an income stream for retirement.

Though it has been possible to invest in a SIPP for a long time, since the new reforms were introduced in April, SIPPs have an increased appeal with substantial tax planning advantages. The flexibility of the new rules has resulted in a marked increase in enquiries from private and SIPP purchasers for commercial property. Whilst any property is held in a pension, the rental income, capital gains or profit does not attract tax – although income drawn from that pension is taxed during retirement.

 

We have already seen examples of properties drawing interest from SIPP holders in the local market, including:

  • Penarth Road Retail Park in Cardiff, which has been purchased on behalf of private clients and is fully let to a mixture of tenants
  • Tesco and Domino’s in Maes y Coed Road, Cardiff - attractive because they are modern buildings with first class tenants.

 

Investing in commercial property is an attractive proposition and one that we anticipate growing in popularity. However, anyone considering this option should seek the advice of an independent financial planning advisor, as well as professional property advice about the suitability of any commercial property, before embarking on this type of investment.

 

Cooke & Arkwright will be marketing more properties across South Wales suitable for SIPPs in the near future. If this is of interest to you and you’d like to find out more, please do not hesitate to contact me.

Jane Shankland is very approachable and responsive as well as having sound all round experience of rating law. The Council has benefited greatly from Jane’s support, sound advice and skill and the Council will continue to use her services.

Louise Horner, Blaenau Gwent County Borough Council