London Central Portfolio launches closed ended central London property fund which can take Sipp and Isa cash

16th April 2014

London Central Portfolio (LCP), has launched its fourth fund, London Central Apartments II (LCA II) which is designed to be SIPP and ISA eligible.

Naomi Heaton, CEO of LCP, says: “This diverse eligibility may come as a surprise. Widely known that commercial property can be directly held in a SIPP, Gordon Brown’s 2006 U-Turn dashed the hopes of directly holding residential. However, LCA II can as it complies with HMRC’s criteria of being a ‘Genuinely Diversified Commercial Vehicle’ (GDCV). Few other residential funds meet this requirement.”

Heaton adds that the closed-ended structure means that investors need a medium term horizon (the fund will run for 5 years with a long stop date of 7 years).

By 2019, the projected return is £12,150 on a £15,000 investment. Hugh Best, investment director, says: “LCP’s first two funds have demonstrated exceptionally strong results at their most recent valuations yesterday showing increases in capital values since acquisition of over 50%. Their third fund, fully invested in December 2013, has already shown an increase of 27.8%. Whilst past performance is not a guide to the future, they are all on track to achieve their target returns.”

The fund is regulated and approved by the Jersey Financial Services Commission and the Channel Islands Stock Exchange Authority, the mandate for LCA II follows the model of LCP’s previous three funds.

The fund will acquire a diversified portfolio of 1 and 2 bedroom properties in the prime postcodes surrounding Hyde Park, which are upgraded and designed to target the thriving Private Rented Sector. LCA II is the only Sharia compliant residential fund in the UK, making it accessible to both conventional and ethical investors. From a global perspective, it is also eligible for offshore pensions such as QROPs and QNUPs and for offshore portfolio bonds.

By undertaking a ‘genuinely commercial activity’, the firm says LCA II is exempt from higher rate 15% Stamp Duty Land Tax and the Annual Tax for Enveloped Dwellings. LCP says that following the changes announced in the 2014 Budget, issued in detail recently, LCA II has become yet more tax efficient, particularly for non-residents. As it has Genuinely Diverse Ownership (GDO), it is exempted from the CGT charges to be levied on non-resident buyers from April 2015.

The minimum subscription is set at £85,000 for direct investors. However, there is no minimum limit if it is made through an Isa or a Sipp.

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