Types of allowable property
We are happy to undertake a fee free initial assessment of a commercial property, prior to establishment of a SIPP with us. All you need to do is send us details of the property your client is looking to acquire via email, or give us a call.
We are able to assess properties using an online sales link or marketing/auction particulars, or alternatively just an overview of the property sent to us via email, or over the phone. The more information that you can provide, the better.
Any assessment provided will be subject to our usual due diligence.
We own properties across the UK with uses ranging from the ordinary to the extraordinary. Our experience of property purchases, ongoing management and pension administration ideally positions us to provide for your client’s SIPP or SSAS property needs.
If it’s commercial and based in the UK we will happily assess it, be it freehold, leasehold or commonhold. The most common types of property that we see include shops, offices, restaurants, land, industrial units, hotels, and leisure facilities.
Below are some examples of properties that we are able to acquire via a SIPP or SSAS, subject to successful completion of due diligence.
|Sports Stadia||Brewery||Dentist/Doctor Surgery|
|Care Home||Bed and Breakfast||Recording Studio|
We are able to facilitate purchases via a SIPP with Curtis Banks. There are nuances with this type of purchase transaction, and you can find further information about the process via the link below.
A SIPP can borrow up to 50% of its net fund value less any existing liabilities. The ability to borrow does not cease when benefits are being paid from a SIPP; it can be put in place at any time for the purpose of purchasing or developing property.
The terms of the loan vary from case to case as they are often dependent on a variety offactors (for example, degree of risk to the lender) and any special mortgage conditions will need to be assessed on a case by case basis for acceptability. We will always require that the charge over the property be fixed to the value of the client’s SIPP. We are quite happy to deal with any regulated lender that meets our requirements. The loan must be in our name as the legal owner of the property and not the client personally.
We are able to facilitate personal lending to the SIPP for property purchases or redevelopment. There are additional requirements in respect of personal borrowing, put in place to ensure compliance with HMRC regulations. These requirements are outlined below:
- The lender must be the client personally or a buisness that they are connected to (director/shareholder)
- Our pro-forma loan agreement must be utilised
- The client must provide a market comparison of the proposed rates for the loan (to evidence that the loan is representative of an open market agreement)
The income generated from the property must be sufficient to fund all the liabilities associated with the property. Sufficient funding for the property, any required cash float and all associated purchase costs must be in place within the investing SIPP(s) before contracts can be exchanged on a property purchase.
We are also able to facilitate personal borrowing for the purposes of paying VAT due on a property purchase. The above criteria will apply for VAT loans also.
For partial ownership purchases the SIPPs can still acquire borrowing of up to 50% of their net fund values. Each title holder may, at our discretion, require their own separate loan. The debt is detailed under the trust deed. Where borrowing is to be allocated to the non-Curtis Banks clients, we insist that borrowing does not exceed 100% of the market value of their property ownership share, with such liability being documented in a specific loan agreement between lender and non-Curtis Banks borrower. Borrowing should also be secured under a fixed charge.
For more details on how to lend via a SIPP, please see our Property Guide. We also have a helpful case study which outlines the process of borrowing funds to acquire a second commercial property via a SIPP, which can be found here.
In many cases, we will have purchased the property from a connected party, will be selling the property to a connected party or will be letting it to a connected party.
In these cases we must act as if it were ‘an arm’s length transaction’, that is, each party must be acting in their own self-interest and is not subject to any pressure or duress from the other. If we are dealing with a connected party in any transaction, we will require valuation advice from a RICS* qualified surveyor as to the terms for the transaction.
Where we let a property we own to a connected tenant we must ensure that a valuer is instructed to ensure that any lease events (including rent reviews, lease renewals and maintenance/repair obligations) take place as per ‘an arm’s length transaction’.
*Royal Institution of Chartered Surveyors
If a property is used for, or is suitable for use as a dwelling, or is land that forms part of the garden or grounds of such a property, it may be classed as taxable property.
Curtis Banks is unable to purchase taxable property into a SIPP. A full definition of taxable property can be found in the Finance Act 2006, schedule 29A, Part 2,section 7(1) (a).
If Curtis Banks were to purchase taxable property falling under the above definition, HMRC would impose severe tax implications on both Curtis Banks and the pension. We are therefore unable to, in most situations; purchase an asset if it does include a residential element.
Examples of taxable property are:
- Holiday Lets
- Hotel Rooms with catering facilities in the individual letting rooms
There are certain circumstances where the pension can acquire properties with a residential element, if the residential element is to be used in conjunction with the commercial property. There are additional HMRC regulations that would apply here- please contact us to find out more.
There are other types of property that we are unable to acquire into a SIPP. Additional information about allowability and taxable property can be found in our Property Guide.
Unfortunately, we are unable to acquire commercial property outside of the UK.