Buying Commercial Property with a SIPP

SIPP rules allow for the purchase of commercial property. We regularly deal with clients looking to use their SIPP to buy retail units, factories, professional premises, and offices. SIPPs are ideal for this purpose. There are however a number of key points that need to be considered:-

The SIPP will have to charge a market rate to the tenants of the commercial property. Therefore if you are buying a property to run your business from there is no cash flow benefit. The major advantage is that the rental is paid back into your pension fund.

The value of your fund together with any additional mortgage you take (limited to up to 50% of the fund value), should be sufficient to cover the purchase price and purchase costs on the commercial property leaving a float in the SIPP fund to handle initial mortgage payments and other ongoing costs.

If you have insufficient value within your pension fund it is possible to pool your SIPP with others to buy a commercial property.