SIPP Property Investments | Commercial Property Investment Guide

sipp-property-investmentsWere you aware that it is now possible to buy commercial property assets with your personal pension fund? Well you can, using a special financial vehicle called a SIPP.

A SIPP, which stands for “Self Invested Personal Pension” is a specialised personal pension scheme that gives you greater freedom over the types of investment you can buy to build your pension fund.

SIPPs are sometimes referred to as DIY pension wrappers because, unlike a traditional private pension fund where investment options are limited to those selected by the pension scheme provider, you are in complete control and can select from a wide range of investment assets including, amongst others, commercial property investments.

History of UK SIPPs

SIPPs were introduced by the UK Government in 1989 to give investors greater control over where their pension money was invested and they have been regulated by the Financial Services Authority (FSA) since 2007.

Unlike conventional personal pensions, SIPPs allow you to invest in a wide range of assets including shares, bonds, commodities, hedge funds, gilts, and in some instances, commercial property.

SIPP’s are now a popular form of personal pension for many and the number of providers offering SIPPs to the market has increased significantly in the last few years.

Is a SIPP for You?

Before you even consider introducing commercial property into your personal pension fund, you firstly need to decide whether or not a SIPP would suit your personal financial circumstances, and your financial advisor should be able to help here.

We would strongly recommend that before proceeding further with a SIPP you seek the expert advice of an independent financial advisor (IFA) with suitable pension’s experience.

Types of SIPP

There are now a wide range of SIPPs available on the market, for example, there are cheaper online versions which will allow you to invest as little as £100 a month, while at the top end of the market you will find far more comprehensive SIPPS that are more suited to higher net worth individuals.

These financial products offer exposure to assets traded in any recognised stock exchange worldwide – with all the additional risks that come with such an approach.

If you are looking for something in between – and more and more people are finding it pays to tread this middle path – there are a number of so-called “hybrid” SIPPS which are self invested pensions set up by insurance companies, for which providers may require some investment in their own in-house funds, or offer reduced charges on them.

How much will a SIPP Cost?

At the budget end of the market it is currently possible to set up an online SIPP without paying any initial set-up or annual administration charges. Initial fund charges are also usually discounted.

Therefore the only fees you will need to cover will be online or phone dealing fees if you want to hold individual shares or other traded assets.

As you would expect, charges for full SIPPs are much greater – around £300-£400 and more, with additional annual charges and extra costs for including special investments such as commercial property.

What about Personal Tax?

As for tax, the same rules apply as to other pensions.

For the latest position on maximum contributions and annual allowances for UK SIPPs you should refer to the HMRC website.

It may also be worthwhile discussing with your financial advisor the possibility of transferring your existing pension assets into your single SIPP pot.

Before you do this however, have your financial advisor carefully explain in detail the advantages and disadvantages before you do decide to go ahead.

It is obviously far easier to keep an eye on all your investments in a single SIPP, but there are penalties and exit fees to take into account - and you should never leave a pension scheme if by doing so you miss out on extra contributions from your employer.

What Type of Property can you put into a SIPP?

Only commercial property can be included in your SIPP.

Residential property in not allowed.

Having said that however, the different types of commercial property that can currently be included covers a vast range of options.

One of the most common forms of property assets to be included in a SIPP is for business owners to hold their own offices within their pension, but there are many other SIPP possibilities, including warehouses, factories, hotels, petrol stations and the like.

How to Create a SIPP

You can create a SIPP yourself; however we would always recommend that you seek the expert advice of an independent financial advisor (IFA) with suitable pension’s experience.

If you choose to do it yourself, to open a SIPP account, first you need to apply for an Investment account. This you can do online.

Once you have completed the application process, as long as the information can be verified, your account should be up and running virtually straight away, and this will be confirmed within 72 hours.

Understanding your Risk

As with all such investments however, you should make yourself fully aware of the risks associated with a self invested personal pension scheme.

The value of your investments, and any income from them, can fall as well as rise, in which case you would get back less than you invested. The old adage wisely states that past performance is no guarantee of future performance.

Also, take into consideration the fact that tax treatment depends on your individual circumstances and may be subject to change in the future.

Bearing all this in mind – and it is a lot to take in at one sitting - if you are still unsure about whether or not to proceed with a SIPP you might be swayed by the fact that the popularity of these self-invested personal pensions is growing year on year as more and more people look for a wider choice for their pensions savings.

More Information

If you are currently reviewing your pension arrangements and looking at commercial property investment opportunities please contact us to discuss how Investment Property Partners can add value to what you do.



Income & Capital Growth

Investment Property Partnership specialise in delivering exciting property investment opportunities to clients that offer significant income and capital growth potential. Through our extensive network of property and investment agents, developers, property companies, contractors, LPA receivers and investors we can identify exciting off market opportunities that work to promote our clients wealth objectives... growth


Market Intelligence

Accurate and timely market intelligence is a vital component of any successful investment strategy. Our clients benefit from a property intelligence based approach that incorporates information from our extensive property network, market research, analysis and advanced profiling to maximise returns based on client growth objectives and risk preferences... intelligence

Investment Propety

Investment Property Partnership are independent property and real estate investment specialists focused on delivering income and capital growth opportunities to private individuals, corporate and institutional investors. We work throughout the United Kingdom and internationally and our expertise covers the asset classes of land, commercial, residential and overseas property… property experts

Property Finance

Finance is important for any property investor. However, securing the right funding package is essential if you are to optimise your future investment performance. We partner with specially selected independent financial professionals with expertise in delivering most types of property finance including buy-to-let mortgages, commercial finance, bridging, portfolio and development finance... finance