Self Invested Personal Pensions (SIPPs) have gained an increasing amount of interest in real estate investments from pension holders over recent years. The concept of SIPP plans was originally introduced in 1989, creating a ‘hands-on’ approach for pension holders to make full decisions of how and where their pension is invested. For real estate to be eligible for SIPP approval, the properties are required to undergo strict criteria approval, ensuring greater security as an investment option.
The development of SIPP plans have enabled integration and flexibility for pension holders to determine how their funds are invested, enabling control over the resulting returns. Traditional pension plans have often been limited in diversification, where investment options were entirely controlled by the fund managers.
The introduction of SIPP plans has created the opportunity for under-performing investments to be changed at the request of the pension holder, maximising the return potential. The flexibility of a SIPP offers many distinctive investment advantages, avoiding the problems associated with traditional plans that may be trapped into financial losses during periods of economic downturn.
Investments into a wide range of properties can be obtained through property based investment funds. Real estate investments through SIPPs can also be purchased through property funds, where a diverse selection of property investments are selected and managed through field experts. This option allows for expansive return potential and lowers the risk factors involved.
Acting as an individual investor will enable the SIPP holder to benefit from personal control over the pension fund. Owning investment properties through a SIPP fund avoids the inconveniences of mortgages, complicated legal issues, high capital outlay and overall property management issues.
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