Can you have residential property in a sipp

Commercial property purchase is one of the more popular investment choices within our SIPPs. Indeed, only last year, we completed on our 1, th property purchase. Even during a global pandemic, we are receiving a steady flow of new purchase enquiries from clients and advisers. While purchase processes have slowed slightly given the current working conditions of the parties involved in a property transaction, we are still regularly completing on purchases on behalf of clients.

In the past, we have tended to look at specific circumstances; unusual property types , what land you can purchase within a SIPP , and what you need to think about when transferring a SIPP or SSAS that holds a property.

This month, we thought we would go back to basics and look at the more day-to-day types of commercial property enquiry that we receive. Most offices do not cause any issues for SIPP providers, so long as the property passes the necessary searches.

There is nothing usual in many of the office purchases we undertake. However, one thing we often see with office purchases is that there is more than one tenant. Purchasing a freehold property can often lead to the head tenant having more space than they need, so they bring in third parties who can assist with any rental income due to the SIPP.

This approach can be beneficial for companies who may plan to grow their business in the future. It allows them to purchase a property and expand as they wish, but in the short term they can get third parties into the building to assist with the rental commitments. Shops are another popular choice amongst our clients. However, in most instances, shops can cause SIPP providers some issues.

If you walk down any high street in the UK, you are likely to see that the shop occupies the ground floor and that a residential flat is situated above it. When the structure is completed? When its utilities are connected? If your SSAS or SIPP starts a residential property development, you will need to consider how you will get the properties out of your pension scheme before they are deemed to be habitable.

Will anyone want to buy a partially-built house and what price will they pay for it? Would it instead be easier just to sell the land, once planning permission has been granted?

Another very important aspect to consider is the ownership of the property. As a member of a SSAS you will perhaps also be a trustee of the scheme and share the ownership of the property with the other trustees, in your capacity as a trustee. However, any development of the property must be agreed by all of the trustees, including the professional trustee, before the development commences. This means that the operator of your SIPP may be the sole owner of any property held and the operator will need to authorise any development of the property, again before it is started.

If you owned the property personally before it was sold to your SSAS or SIPP it can be hard to fully relinquish the mind-set that you no longer own it, even though it constitutes an asset of your pension savings. To continue reading Join our Community of Smart Investors. Independent full-length company analysis Actionable investment ideas and recommendations Expert investment tools and data Stock screens from Algy Hall Subscribe now.

If you have any queries on whether a property is suitable to be purchased by a Dentons self invested pension please contact us. Whatever your retirement needs, one of our experts will be happy to discuss how we can help you achieve your goals.