Commercial Property

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.

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.

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
• Aparthotels

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.