Overseas property investors ‘rushing into SIPPs’
Simon Conn, managing director of Conti Financial Services Ltd, explained the dangers at the Mortgage Business Expo London. He said brokers would be better off waiting until the SIPP regulations are set in stone before investing clients’ money in overseas properties.
He said: “It is still unclear as to which countries will accept them and recognise the trusts. I’ve seen IFAs rushing around to link up with overseas estate agents and at a recent overseas property investment show, witnessed people signing-up and paying a non-refundable deposit to buy a foreign property to put in a SIPP. We’ve had many enquiries but feel it would be better to wait until the regulations are set.”
Conn explained how investors could potentially lose their investment by acting too early. He said possible problems included bad titles, illegal properties, i.e. those with no planning permission, and countries with little experience of estate agency.
Conn agreed that, should the SIPP changes go ahead and if specific countries recognise the trust, there could be a huge opportunity for overseas investors but he warned that many are just not doing the research or looking at the risks.
However, Andrew Callon, senior partner at Powell Callon solicitors, said: “Institutions are lining up millions for property investment when [the changes to] SIPPs come in but I believe most of this is destined for the UK market. With a possible rate decrease in January or February, coupled with ‘A-Day’, UK house prices could experience a sharper climb. SIPPs will cause more of a blip on the UK market than the overseas one.”