The concept of self-invested personal pensions (SIPP’s) is nothing new, but it is a financial entity that continues to evolve in line with fiscal regulations. Just recently, the Financial Conduct Authority (FCA) has added UK commercial property as a standard asset that is eligible to be held within SIPP’s, while also establishing a new regulatory capital framework for operators. Commercial real estate investment is one of the more diverse facets of modern SIPP’s and it is also one that offers the potential for incredible returns.
Commercial Property Investment as an SIPP: 3 Key Benefits
With this in mind, it is worth appraising the key benefits of commercial investment as an SIPP option. These include: –
1. Invest in a Wide Range of Properties
There are a huge number of commercial property types available on the market, from shops and retail outlets to office space and warehouses. These can all be included within your SIPP plan, especially if you partner with a reputable service provider such as James Hay. This affords you an opportunity to diversify your pension plan, and assume better control over future returns and the contributions that you make. The wide range of commercial properties available also enables you to tap into the most profitable aspects of the real estate market, which is crucial in a volatile or changeable economic climate.
2. Access either Short or Long-term Returns
One of the key benefits of all SIPP’s is that they offer individuals considerable flexibility in terms of how they contribute to their plan and manage wealth. Commercial real estate investment offers a particularly viable case in point, as it is available through numerous different vehicles which help to optimise either short or long-term gains. Whether you invest in commercial office space and lease out individual units or look to renovate a building and sell it to a developer, there is opportunity to generate income in line with an overall investment strategy.
3. Manage Multiple Investments within a Single Space
Over time, it is likely that you will invest in multiple commercial properties and establish a strong and purposeful portfolio. While this is extremely positive and creates the potential for you to generate considerable personal wealth, it can also be difficult to manage your investments effectively or in a way that minimises costs. When contributing to an SIPP, however, you have the opportunity to ‘wrap’ your investments and create an administrative infrastructure in which they can be managed collectively. This means that you can collate all of your individual investments and pull them into a single place, while also benefitting from expert guidance and advice.