SIPPs now able to hold French property, but investors urged to remain cautious
Jennifer Lowe, 22 March 2010
Due to a change in French law, SIPP investors now have the ability to hold French property as part of their investments, but Rowanmoore Pensions is urging investors to remain cautious and get advice.
On 2 March 2010, France brought into effect a new law that may make it more straightforward for UK pension schemes to invest in French property.
French property has always been very attractive to UK investors but until recently French law did not recognise trusts.
As SIPPs and member-directed schemes are, in the main, written under trust, it was very difficult for a UK pension scheme to own a French property. Now that the law has changed in France to recognise trusts, this should open up its property market for UK pension clients to invest there.
Whilst this change to French legislation looks encouraging, the way it will actually work and other aspects of owning property in France need to be thoroughly investigated.
Robert Graves, head of technical services at Rowanmoor Pensions, said, 'It is worth remembering that no matter where it is located, residential property is taxable if held in a UK pension scheme, so this development is not a panacea for "SIPP-ing" a French holiday cottage. Also whilst investments held in a UK pension scheme get favourable UK tax treatment, French taxes could still apply. This is why clients need to seek specialist advice.’
Rowanmoor Pensions is now seeking advice from its specialist legal advisers on how to maximise this opportunity and minimise any risk for its UK clients.
Graves added, ‘We could now see much greater interest in French property and our specialist property team at Rowanmoor Pensions and our legal advisers are investigating this opportunity right now.
‘Pension scheme trustees must have good title to investments and this law change should ensure this but other aspects of owning property also need to be considered. This is where bespoke pensions administrators who have the products and expertise to handle such investments come into their own.’
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