Splitting Title to Put Commercial Space in a SIPP

A SIPP cannot hold residential property, which is a problem for mixed-use buildings such as a shop with a flat above. Splitting the title can let the pension hold just the commercial part.

The problem

If a building is partly residential, a SIPP cannot simply buy the whole thing, because the residential element is taxable property that triggers heavy charges. Yet the commercial part may be exactly what you want in the pension.

Splitting the title

The solution is often to split the title so the commercial and residential parts become separate legal titles. The SIPP then acquires only the commercial title, keeping the pension onside, while the residential part is held outside the pension. This needs careful legal work to create clean, separately lettable and saleable titles.

When it works

Splitting title suits parades of shops with flats above, and buildings where the commercial and residential parts can be cleanly divided, including access and services. It does not suit buildings where the uses are too intertwined to separate.

Get it structured properly

This is a specialist area combining pension rules, property law and tax. A group of SIPPs can also jointly hold an interest, see joint SIPP ownership. Take legal and regulated financial advice before proceeding. See SIPP commercial property.

Can a SIPP hold part of a mixed-use building?

Often yes, by splitting the title so the commercial part becomes a separate legal title that the SIPP acquires, while the residential part is held outside the pension.

When does splitting title not work?

Where the commercial and residential parts are too intertwined to divide cleanly, including access and services.