Focus 112 – Affordability of Property in SIPP and SSAS

Are you and your client considering putting a commercial property in a SIPP or SSAS?

It is important that you consider the full costs of the purchase at outset, to ensure the option is viable.  They key points to consider are:

  • Purchase Costs – Can the SIPP or SSAS afford the whole property? If not, we allow partial purchases or joint purchases with another party.
  • VAT on Purchase Price – This should be reclaimable but if the purchase is with an existing lease in place the transaction may qualify as a Transfer of a Going Concern (which simply means the VAT on purchase doesn’t need to be paid).
  • Stamp Duty Land Tax (SDLT) – Changed in 2016 to a tiered tax structure.
  • Solicitor, Surveyor and Lender fees – If your client is looking to borrow monies to assist with the purchase, we are happy to consider lending from the individual, either personally or via their company.
  • Ongoing Property Fees (e.g. Insurance, rates) – We do not insist on expensive professional property managers being in place, we will happily allow the client to manage the property.
  • Vacant Property Issues – Unlike a lot of providers, we do not insist on a Lease being in place at the point of purchase.
  • Adequate Property Insurance – The Trustee’s responsibility for insurance commences at exchange and it is essential that all potential liabilities are included with sufficient cover.
  • Mortgage – Your client can borrow up to 50% of the value of the scheme assets.  This can be done through a commercial Lender, themselves personally or via a third party.

If you have any further questions or there is anything we can assist with, please contact your Business Development Consultant or the Adviser Support Team.

Business Development Team

David Bonneywell, Director, 07771 986 539

Michael Hurley, London, 07826 067 563

James Cannon, North West, 07539 121 220

Gemma Fenton, Wales/South West, 07940 254 064