PROPERTY experts Cluttons are predicting a rush to buy commercial property ahead of changes in legislation on April 1.

Under changes in the law, owners of a SIPP, a Self-Invested Pension Plan, will only be able to borrow 50 per cent of the value of their existing pension fund, compared to the 75 per cent of the value of the property, which affects the levels of gearing available to SIPPS.

John Wilkins, partner at Cluttons, said: "The use of SIPPs as a method of purchasing commercial property has proved attractive to many business people especially where they let the property to their own business.

"We are expecting to see an increase in interest from those people who want to take advantage of the higher gearing permissible under the current arrangements and purchase property, especially in the small industrial and office markets where occupiers are typically looking for up to 5,000 sq ft."

Currently a person with a pension fund worth £100,000 and interested in buying a £400,000 building, could borrow up to £300,000. After April 6, 2006, the borrowing limit would be reduced to £50,000.

Mr Wilkins added: "The SIPP route to property ownership has proved attractive as many investors buy commercial property for their own use as office premises and then rent back to themselves.

"This allows the monthly rental to be paid gross into their SIPP, thereby growing the fund's value and on the sale of the property it is also completely free of capital gains tax."