How to Buy Commercial Property Through a SIPP
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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Buying commercial property through a SIPP follows a set path. Knowing the steps helps you plan the funding and avoid delays.
The steps
- Choose a SIPP provider that allows property. Not all do, and fees and service vary, so pick one experienced in commercial property.
- Check the funding. Add up the pension funds available, plus any borrowing of up to 50% of net value, plus contributions you can make. This sets your budget.
- Agree the purchase. The SIPP (through its trustee) is the buyer. If you are buying from a connected party, an independent RICS valuation is needed to fix the market price and rent.
- Due diligence and lease. The usual searches, survey and legal work, plus a lease at a market rent if the property is to be let, including to your own business.
- Completion. The trustee completes, and rent then flows into the pension.
Funding options
You can fund a purchase from existing pension pots (including transfers in and pooling several members' funds), from borrowing, and from contributions. Some providers allow an in-specie contribution, where a property you own personally is contributed into the pension, though this is complex and needs advice.
Get advice first
This is a regulated decision with tax and pension consequences. Speak to a regulated financial adviser and your SIPP provider before committing. See SIPP commercial property for the rules.
Can I buy my business premises through my pension?
Yes. A common use of a SIPP or SSAS is for a business owner to buy their own premises, with the company then paying market rent to the pension.
How is a SIPP property purchase funded?
From existing pension funds (including pooling several members), borrowing of up to 50% of the scheme's net value, and contributions.