With base rates at a historical low (0.5%), cash holdings are generating almost no returns: few SIPP providers offer more than 1% on deposits; whilst even the best cash ISAs will only return around 3% - or a rather modest £160.20 on a full year’s allowance. This combined with the ongoing volatility in equity markets and either low yields or high risk from bonds and gilts, has left smart savers struggling over where to invest.
London Central Portfolio (LCP) who specialise in maximising the investment returns offered by Prime London Central’s (PLC’s) most exclusive postcodes, is set to change this. They have recently launched their third fund, London Central Apartments Ltd (LCA), specifically designed to be SIPP, SSAS and ISA eligible, thus opening up this previously out of reach asset class to the ‘everyman’
Why Prime London Central (PLC) property for your SIPP?
Average property prices in London have increased on average by about 8.5-9.0% p.a. over the last 50 years². Whilst the FTSE 100 is down by around 20% since its pre-credit crunch high, prices in London’s two most exclusive boroughs are up 23%³, for the period Q3 2007 to date.
“For many years, Prime London Central residential property has been a top performer for investors who can afford to access this alternative asset class. It matches investors’ desire for blue chip tangible assets and has a proven track record at a time when the stock market continues to fluctuate. However, with an average price of over £1 million, for many the only chance of investing here has been during a game of Monopoly! London Central Apartments changes all this.” says Naomi Heaton, CEO of LCP.
LCP’s new fund, London Central Apartments will repeat the successful model of LCP’s two previous funds which show a 35% capital growth to date⁴. Its mandate is to cherry-pick one and two bedroom properties offering the greatest performance potential in the most exclusive postcodes of Prime London Central – finding the best deals, adding value through renovation and letting to executive tenants.
LCP’s new fund, London Central Apartments
Target fund value £50m+
Investment Term 5yr closed ended fund (with 2 annual options to extend)
Eligibility UK resident, non-resident & non-domiciled investors, SIPPs, SSASs & ISAs, traditional & ethical investors.
Open for second close
LCA is projected to provide an IRR (annual return) of 10-13% per annum after a five year hold.
Jo French, Managing Director of Pointon York, market leader in specialist pensions, who are accepting LCA in their SIPPs, says “We have seen increased interest from investors looking to diversify their portfolios and spread investment risk. Advisors are looking for products that have a proven and evidenced track history. We are living longer and more and more people are putting off purchasing an annuity until their later years.”
Longer term products such as LCA work well with this life choice. “At a time when Europe is burning, equities are out. Where can my SIPP rest and not be eroded by inflation? In my view, the only possible rock-steady investment is in property, property located in areas of high demand and limited availability. The fund is ideal for me as I do not want the bother and worry of managing my own property and I won’t need to touch the money for five years. Given the past performance of central London property over the last 50 years, and the performance of LCP’s last two funds, I have high hopes for an excellent return” says an investor Professor Jonathan Waxman.
How is LCA SIPP eligible?
Whilst commercial property can be held directly in a SIPP, Gordon Brown’s U-turn in 2006 dashed any hope of including directly owned residential property. However, LCA has complied with HMRC’s rigorous regulations and listed on a recognised stock exchange to bring this investment opportunity to both SIPP and ISA investors.
Once LCA has completed the purchase of the first three properties, none of which can exceed 40% of the fund’s asset value, it will become a ‘genuinely diversified commercial vehicle’ which is HMRC’s main requirement for accepting SIPP and SSAS investments. This will trigger the last opportunity for investors to subscribe to LCA.
The annual SIPP allowance is £50,000 and the government permits any unused allowance from the previous three tax years to be carried forward to this year. The maximum “SIPP pot” is now capped at £1.5 million but SIPP investment of any size is particularly attractive as contributions can attract 100% tax relief. Smart savers can also invest through their share ISAs, which can be topped up by £11,280 per year. They may even wish to consider Junior ISAs, which have been available since November 2011. These ISAs have a limit of £3,600 for each eligible child and are ideally placed to help secure your children’s future.
“LCA gives investors the opportunity to benefit from prime London Central through tax efficient wrappers like SIPPs, SASSs and ISAs and at a fraction of the price. LCA is probably one of the best opportunities available for pension savers wanting financial security in later life.” Hugh Best, Head of Investment at LCP.
LCA is Sharia compliant. Another industry first for LCP
LCA is the first Sharia compliant residential fund available in the UK and has been approved to be included in Pointon York’s Sharia compliant SIPPs, the first to receive accreditation from the Islamic Bank of Britain (IBB). This launch is very significant for IFAs with Muslim clients as it allows them to include pensions into their retirement planning service without compromising their clients’ beliefs.
Faizal Karbani, CEO of financial advisory firm Simply Sharia, said “LCP’s Sharia compliant investment opportunity provides an excellent chance to invest in an exciting asset class within the UK. The projected returns are fantastic and LCP provide a credible track record. As such, many of our clients are investing in this proposition. The fact that it is Sharia-compliant is a perfect recipe for us.”