New UK commercial property rules announced on Wednesday - making it easier to convert commercial properties into residential housing - could hit investors in commercial property using SIPPs and SSAS.

The proposed changes offer a reduction in red tape with increased flexibility for the repurposing of certain commercial premises, via reform of the Use Classes Order.

A wider range of commercial buildings will be permitted to change to residential use without the need for a planning application.

The change in rules is an attempt by UK Prime Minister Boris Johnson to kick start the post-pandemic construction industry.

However, HMRC do not usually permit residential premises to be held as an asset of a SIPP or SSAS so investors could incur large tax charges should they get it wrong.

James Jones-Tinsley, self-invested technical specialist at Barnett Waddingham, said: "It is vital, therefore, that members of SIPPs and SSASs contact their pensions provider firstly, before making any proposed changes to properties held within their pension.

"In most cases, their provider – with their trustee ‘hat’ on - will be the sole or co-owner of the property itself. As a result, no alterations to the property can be carried out without their prior knowledge and permission.”