Property can be a lucrative investment for IFAs, says Hornbuckle Mitchell

The SIPP and SSAS provider believes property is often mistakenly viewed as unattractive by Advisers, who deem it a transactional piece of work that holds little longer term value.

In reality, placing property in a pension can be a healthy fee earner for Advisers as clients require advice at the point of the initial transaction and ongoing advice thereafter regarding incoming rent, property development and service borrowing requiring repayment.

Lisa Webster, Senior Technical Consultant, says:

“Some Advisers fail to take into account the longer term value of property, seeing funds simply tied up in bricks and mortar.

“Many are led to believe there’s little longer-term income potential as property is an illiquid investment, often taking up a high proportion of the pension scheme’s asset. However, the Financial Adviser’s role is very important. An Adviser has the job of handling the incoming rent and even if the pension has borrowed and has debt to be repaid there will normally be surplus rent given that borrowing limits are fairly restrictive.”

Lisa says investors are growing increasingly interested in commercial property, in light of the highs and lows of the equity markets, and Advisers should seek a knowledgeable and experienced provider with a flexible approach.