Purchasing Commercial Property With A SIPP, SSAS or QROPS Pension
Fox Davidson commercial finance work with clients wishing to purchase a commercial property using a self-invested person pension. Our minimum loan size for SIPP mortgages is £1m which means your SIPP must currently have assets of £2m plus.
Purchasing a commercial property in a SIPP has many tax advantages. No capital gains on disbursement, no income tax on rents received and potential IHT exemptions.
You can purchase and finance a commercial property that you will run your own business from or a commercial property that you will rent out to an unrelated company.
SIPP Mortgage Terms
- 50% loan to value. The mortgage amount is restricted to 50% of the value of the assets in the SIPP at the time of application.
- Lenders will not include the value of a proposed property purchase; the lending is based on the current value of the pension fund.
- SIPP mortgages are also subject to a maximum of 75% loan to value against the subject property being funded.
- Only commercial property can be financed in a SIPP
- Commercial property may be held as an investment or trading premises
- The loan may be repaid on an interest only or capital and interest basis.
- Fixed rate and variable rate options.
- Loans from £1 Million and typically up to £50 Million
Investment or trading business?
There are two ways to own a commercial property in a SIPP.
- As an investment. The property must be rented to an unconnected business.
- For your trading business. The trading business rents the property from the SIPP.
SIPP Mortgage Lenders
Some but not all high street commercial banks, a select few building societies and several challenger banks will lend to a self-invested personal pension.
To discuss a SIPP mortgage in more detail please do contact us on 01179 897950 or email the team enquiry@foxdavidson.co.uk
SIPP Mortgage Questions
Can SIPP finance be set up on an interest only basis?
Whilst most banks would now prefer to know they are getting their money back and will be adamant that the loan is set up on a capital and interest basis, there are interest only options.
What is the maximum loan to value for a SIPP mortgage?
The loan to value is based on the property value and the value of your SIPP.
You may borrow up to 75% to 80% of a property value.
The overriding factor will be a maximum loan to value of 50% of the current SIPP value.
What are the rates of interest for a SIPP mortgage?
Rates of interest are no different to clients wishing to finance commercial property outside of a SIPP. The amount of lenders willing to lend is slightly restricted which will offer less choice.
Working with Fox Davidson
The team at Fox Davidson specialise in a few select areas of property finance. Funding property held in a pension is our bread and butter. We can fund property held in a SIPP a SASS or an offshore pension scheme (QROPS).
With access to all lenders in the UK mortgage market we are best placed to source the best SIPP finance terms.
We provide a relationship-based service which means we like to meet our clients to better understand their situation and mortgage requirements. We can also work by email and phone.
Case Study: SIPP finance for an Amazon distribution company.
In November 2018 we were approached by a company in the South West of the UK. They ran a successful business distributing their own products in partnership with Amazon.
They had successfully funded their SIPP. On the advice of their accountant they wished to purchase their own business premises in the SIPP.
Fox Davidson were able to agree terms for a loan of £600,000 against a property value of £900,000. A fixed rate of interest for 10 years was agreed.
This gave our clients stability of knowing their payments would not change for 10 years.
The SIPP received market rent from the company all of which was tax free.
