Group Property Transactions Background
Commercial Property investments within Self Invested Pension Schemes are quite popular. The ability for a Scheme to borrow 50% of its net assets can greatly assist in the transaction, but even so in many instances it is still difficult for the Scheme to afford a specific property.
The solution may be to consider the purchase as part of a group, whether other parties share in the ownership of the property, and thus make the purchase affordable.
Group Property Transactions Summary
- It is possible for a SIPP to participate in a group transaction, where the group jointly owns the property rather than any one party individually.
- Typically, the group will consist of other pension schemes like SIPPs, and the membership of the schemes usually relates to a family group or business partners/directors.
- The group can consist of other parties too, such as a company or individual. This might help where affordability in the pension remains an issue.
- Each participant’s ownership is determined by the amount invested compared to the total cost. They then receive rental income and pay costs proportionately.
- A partnership agreement governs interactions when a pension scheme is in the group. This would usually be prepared by the solicitor acting on the purchase.
Group Transactions
Group transactions often involve SIPPs or SSAS schemes belonging to those with a common goal, like family members or business partners. This combines funds to improve affordability.
It is possible for non-pension entities like a member or company to be in the group. This helps where contribution limits prevent funds going into pensions, or there are advantages to retaining ownership personally.
In specie contributions of part of the property can allow temporary shared ownership in line with joint purchases.