REITA weclomes relaxed rules for borrowing limits

Reita, the education and awareness campaign for property investment and REITs in the UK, has welcomed the decision by the UK tax authorities (HMRC) to relax the rules surrounding commercial property borrowing limits for self-invested personal pensions (Sipps).

In a statement, Reita said the consequence of this decision is that it allows transfers of commercial property borrowing from one provider to another. Previously, Sipp investors who bought commercial property with a mortgage of up to 75% loan-to-value before A-Day were often stuck in highly priced, uncompetitive products.

Following the relaxation however, investors now have the option to transfer to a new Sipp provider without becoming subject to the more restrictive post A-Day borrowing rules and the associated tax penalties. Now, Sipp investments including commercial property with attached borrowings can be transferred to another Sipp provider to take advantage of better administration and more competitive fees.

Philip Fry, programme director of Reita, said: ' Given the recent budget changes to pension taxation for higher earners such as the reduction of higher rate tax relief, there should already be increased incentive for investors to consider placing commercial property in their Sipps, with the potential benefit of tax free growth and the added flexibility Sipps can provide.

'Obviously the ability to invest in unquoted shares and intangible assets is very attractive to Sipp investors and, following this recent confirmation from HMRC, we are delighted that more opportunity now exists for further commercial property investment as a result of the rules relaxation.'