LONDON - Investors who are hoping to dip their hands into the property markets courtesy the self-invested personal pension (Sipp) scheme would do better to check the antecedents of some firms that claim to offer them the best deals, say analysts.
“A-Day”, as the 6th of April has been dubbed is bound to trigger a rush to the property market and investors could be duped if they are not careful. April 6 is the day when the new rules come into effect. David Baker, director of James Hay, the UK’s largest Sipp provider says that it is very difficult to investigate if the firms are indeed above board, “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. If they are UK-based we try to meet them. But if not it is difficult to know if they are responsible or rogues. We can’t investigate them.”
He said that if they did not have a way of checking out these companies then it was quite obvious that the clients would also be unable to do so.
Even Scottish Equitable is warning people that investing a second home in SIPPs is risky unless the clients are aware of all the rules as well as the loopholes. Rachel Vahey, pensions development manager at Scottish Equitable, says that consumers could be a target of a misselling scandal if they blindly put their second home in a SIPP.
She says that the tax rules are pretty complex and that unless they are clearly understood, consumers could be duped, "Given that there is usually an emotional attachment to a second home it may not be wise for IFAs to advise their clients to put their second home in a Sipp,” she observed.
As far as overseas property is concerned, experts warn that this option is not suited to everyone, “We suggest that investors do not hold more than 20 per cent of their Sipp in property. So if you are buying a £300,000 house, you should have £1.5 million in the pension plan,” said Justin Modray, of BestInvest, a financial adviser.
Posted
on : Mon, 24 Oct 2005 07:40 GMT | Pensions News
By : Pippa Fielding
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