Sipps boosted by commercial property investments - commercial mortgages

18 June 2007

The government''s decision not to allow residential property to be held within a Self Invested Personal Pension (Sipp) has not affected the popularity of commercial property investment options, it has been suggested.

The last minute change, announced by the government twelve months ago, meant that many investors who bought a Sipp with a view to residential investment are now seeing the benefits of commercial property, Standard Life has suggested.

The large number of customers looking to buy business properties suggests that the uptake of commercial mortgages is also on the increase.

"Analysis of our Sipp property portfolio reveals that approximately 80% of customers are buying their own business premises and 20% are investing in property to rent to third parties for direct investment," commented Alistair Hardie of Standard Life.

"Undoubtedly the U-turn has removed a very attractive investment option for buy-to-let investors but it''s evident that many of our customers who buy a commercial property with their Sipp are doing so for sound business reasons," Mr Hardie added.

Up to 50 per cent of the net value of a customer''s pension fund can be borrowed by Sipps to invest in the likes of commercial property.