UK Commercial Property Reclassified as a Standard Asset

By Simon Morris On Friday, August 29 th, 2014 · no Comments · In , ,

In light of the FCA announcing that UK commercial property has been added to the standard assets list, Simon Morris discusses what this means for UK property investment funds.

Simon Morris, Commercial Property Specialist

As a London-based property expert with a speciality in commercial property, Simon Morris acts as an advisor to UK property investment funds on how they can maximise revenue potential on their property portfolios to guarantee long-term profit.

Simon’s industry experience has lead him to believe that the recent Financial Conduct Authority (FCA) announcement that it has moved UK commercial property to the standard assets list for Sipps is monumental.

FCA Announce Change to UK Commercial Property Asset Allocation

Specifically, despite the fact that as recently as this May, the FCA had claimed that it would keep UK commercial property as a non-standard asset, last week, along with bank physical gold bullion, account deposits, units in regulated collective investment schemes and National Savings & Investment products, the authority came out and said that UK commercial property has been moved to the standard asset class.

The FCA released a statement responding to the change. In the statement, the authority said that “Our experience of Sipp operators that have exited the Sipp market has shown that where non-standard asset types are held within schemes the costs involved in transferring these schemes to another provider can be significantly higher than for schemes containing only standard asset types. We did not receive feedback that persuaded us otherwise.”

This Move Could Make the UK Commercial Property Market More Versatile

According to FT Adviser, the FCA elaborated on the move. They argued that the significance to a variety of Sipp operators of the entry of UK commercial property has meant that it can be a standard asset. This means it will be easy for it to be transferred between pension providers, in cases where there is a party ready to take on the asset. However, in circumstances where this is not the case, the property in question would be reclassified as a non-standard.

Simon Morris welcomes this change. This could act to make the UK commercial property market more versatile, despite the fact that the cost of transferring UK commercial property will be higher than that for most other investment. It could help drive higher revenues in the long term for UK property investment funds’ property portfolios.

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