A digital property investment platform has launched a product that allows people to invest their pension in bricks and mortar with zero administration fee.
Bricklane.com has unveiled a self-invested personal pension (Sipp) product that enables people to benefit from residential market property returns without taking capital out of their pensions and is pushing it as an alternative to traditional buy-to-let investment.
The digital firm’s funds have been included in Hartley Pension Sipps and incur no administration fees for investments of more than £25,000.
Buy-to-let landlords have recently been hit by Prudential Regulation Authority underwriting rules that assess the viability of their entire portfolio when they wish to purchase a new property, adding greater complexity to the mortgage process.
The latest wave of regulation comes on top of a 3 per cent stamp duty surcharge on additional properties and a reduction in mortgage tax relief.
Bricklane.com’s offering comes a year after the launch of its online platform Isa wrapper, and Regional Capitals fund, which owns properties in Leeds, Manchester and Birmingham.
The fund, which invests in professionally managed properties, returned 8.72 per cent to investors in its first year through a combination of rental income and capital growth.
Simon Heawood, chief executive at Bricklane.com, said: “Many still consider residential property to be an attractive investment option for retirement planning and there have been long-standing demands from investors and advisers alike for its inclusion in tax-efficient pension wrappers.
“But to date, investors have had to make trade-offs between investing in property and the benefits of keeping money within their pension.
“Our partnership with Hartley Pensions allows us to offer the UK’s first residential property fund in a SIPP with no third-party charges, meaning customers can open a new SIPP at no additional cost or transfer from an existing provider and make instant savings.”
Jason Hollands, managing director of business development and communications at Tilney Investment Management Services, said: “The British public have long had a love affair with owning properties with some eschewing regulated financial products altogether in favour of buy-to-let as a source of funding their retirement.
“It is certainly true that the government has taken successive measures in recent years to dampen buy-to-let and for many, it now makes sense to get investment exposure through property investment funds or trusts within the tax efficiency of a Sipps or Isa rather than owning direct properties in a taxable environment.
“However, property should only ever be one component of a diversified portfolio, and for most investors it will make sense to focus on diversified commercial property funds rather than residential vehicles, where they can benefit from rental income on long leases. When selecting a property fund, liquidity should be a key consideration.”
simon.allin@ft.com
