SIPP Rules: What Type of Property is Allowed?

SIPP stands for Self-Invested Personal Pension, and it is a great new way for workers in the UK to take control over their plans for retirement, providing them with more flexibility and control when it comes to investing for the future. An added bonus is that workers can choose to invest in property through a SIPP.


Here are the types of properties that are allowed in a SIPP investment plan:

1. Overseas Property

One investment option is property that is overseas. You can opt to purchase an apartment or house in another country and then use it for commercial reasons. Though this can create many advantages for you, it also comes with several disadvantages. There is not only a currency risk, but when you buy property overseas, it also usually involves higher costs than you would incur if you were purchasing and dealing with property based in the UK. In addition, though you may not have to pay UK taxes on the property, you may be liable for local taxes. Therefore, you should think long and hard about whether or not the benefits outweigh the risks of investing in overseas property through your SIPP.

2. Residential Property

You can invest in residential property through a SIPP. However, this property must again be used for commercial purposes.  For example, you could buy an apartment with a SIPP and then rent it out to a third party. Or, you can lease it out to someone else. However, if you personally choose to use it, you will have to pay open market rent to your SIPP. Keep in mind that the residential property is meant to provide you with retirement benefits, as it is part of your pension fund only. In addition, another responsibility that will fall upon you is the maintenance of the property you invest in.

3. Commercial Property

Typically, any property that is not considered residential property will fall under the category of commercial property, and you can use your SIPP to invest in these. Care homes, hospitals, prisons, hotels, and other properties that may at first appear residential are actually considered commercial property as well. Other businesses are also considered commercial property, including shops and stores, as well as shopping centres, office buildings, restaurants and cafes, sporting facilities, medical centres such as doctors’ offices, and industrial properties such as warehouses, garages, and distribution centres. As you can tell, when it comes to investing in commercial properties, you have many options, and you can choose the businesses and industries that you want to invest in, in order to help them grow and succeed. So, for example, if you want to support green technology, you can use your SIPP to invest in a property that a company is using to develop eco-friendly products.

4. Land

You can even use your SIPP to invest in land. Many people choose to invest in agricultural land in the UK, but this, too, falls under the category of commercial property. Another option is to invest in land plots found in large holiday resorts overseas.

If you want to be in control of your pension, consider investing in property.  You don’t need a large pension fund to benefit, and you can have as little or as much financial involvement as you want. A SIPP offers great flexibility when it comes to investments, and you are sure to find one that meets your needs.