Frequently asked questions

Does the property need to be sold to pay pension benefits?

It is not necessary provided there is sufficient other liquid assets that can be sold to pay pension benefits. If however more income is required then it is always possible to sell the property to a connected party or on the open market.

Can a SIPP/SSAS own a furnished holiday let because it is being treated as a commercial venture?

No, furnished holiday lets are still deemed residential because they are suitable to live in so a SIPP/SSAS would not be able to purchase such an asset.

Can property be purchased at auction?

Yes, although there can be issues and risks associated with this type of purchase. You must be certain it will be allowable within the SIPP/SSAS or the client may end up ether loosing their deposit or having to purchase the property themselves.

Funds should be ready in the SIPP/SSAS to purchase the property because there may be a time limit on completion of the purchase.

Can a pension scheme purchase property that is owned by the scheme member?

Pension schemes are able to purchase assets from the scheme member and connected parties (including connected companies, such as the member’s employer). However, it must be demonstrated to the satisfaction of HMRC that any such purchase takes place “at arm’s length”.

In practice this means that the pension scheme will have to purchase property from a connected party for its market value, as determined by an independent valuation. The same goes for the level of rent that the pension scheme should charge a tenant with a connection to the scheme member.

Can property be transferred from the member’s existing pension scheme?

A registered pension scheme can accept an “in specie” transfer of property from another registered pension scheme. Although many of the legal and administrative processes are the same as a normal acquisition, this is not treated as a disposal for money’s worth, and so there is no Stamp Duty liability (and the existing pension scheme is already exempt from CGT).