Commercial Property may be purchased through the SSAS as part of the trustees’ investment strategy to provide retirement benefits. Buying property from the principal employer, or an associated employer is tax-efficient and can inject valuable cash flow into the business, as well as providing a regular income to the SSAS in the form of rent.
An independent valuation of the property must be obtained prior to purchase. If there are insufficient funds available within the SSAS the trustees can borrow up to 50% of the net value of the SSAS’s funds to buy the property. The trustees take on the borrowing, which is not reflected in the employer’s accounts. The member trustees need to regularly review the property’s insurance to ensure that adequate cover is maintained. This insurance will be held in the names of Rowanmoor Trustees Limited and the member trustees and should include adequate public liability cover of at least £5 million. Rowanmoor Pensions has negotiated a block insurance policy for member trustees, which offers cover at competitive rates. Further information can be found in the Property Insurance Policy Key Features.
It is also important to ensure that rent is paid on the due dates and regular rent reviews take place. The member trustees will be responsible for the management of any property held as an asset of the scheme. Rowanmoor Pensions will not act as a property manager. Please refer to Rowanmoor Pensions for guidance if the trustees are considering property purchase as there are other issues, for example potential contamination from asbestos which will need to be addressed.
The answers to some of the most common questions we are asked are given below and more detailed information about property purchase can be found in our SSAS and Family Pension Trust Commercial Property Guide in our SSAS literature library.
What limits does Rowanmoor Pensions put on property acquisition?
The Scheme Rules are structured to allow the trustees to invest in any way they wish, as long as the investment does not give rise to an unauthorised payment charge. Providing the investment is an acceptable commercial property and made in the interests of the members and their beneficiaries, the trustees may invest 100% in a suitable property, even borrowing to do so. We will, however, need to ensure that the property does not represent an unacceptable risk to the trustees; environmental and asbestos risks for example will have to be at an acceptable level. Please contact us if you have any questions about acceptable property options.
Who can the trustees borrow from?
We do not stipulate or limit the range of potential lenders. However, all the borrowing documentation needs to be individually agreed by Rowanmoor Trustees Limited before the borrowing may proceed.
Can the member trustees use their own solicitor?
Yes. We naturally have links with solicitors highly experienced in this kind of work, but the choice of solicitor remains with the member trustees.
Does Rowanmoor Pensions insist on the appointment of a property management firm?
No. We believe the member trustees themselves are best placed to make the decision as to whether to manage the property themselves, or who to retain to do so if they do not. Rowanmoor Pensions does not offer property management services.
Will Rowanmoor Pensions consider joint ownership ventures?
Yes, although we do suggest caution be exercised. As simple a structure as possible is preferable, which should be backed up by clear documentation outlining the responsibilities and obligations of all parties. Please contact us if you are considering a joint ownership venture for further information.
How can the trustees manage the unexpected, such as the death of a member?
Although Pension Term Assurance is no longer available, it is still possible for the trustees to effect life assurance cover on the members’ lives, to cover a mortgage liability for example. The Rowanmoor Pensions Life Assurance Scheme is available exclusively for members of a Rowanmoor Pensions Small Self-Administered Scheme (SSAS), Self-Invested Personal Pension (SIPP), Family Pension Trust and Defined Benefit SSAS.
