Let’s cut straight to the chase here, who are we trying to kid; using a pension scheme to acquire a property is slow and expensive. What you need to worry about are two things, firstly, anyone who claims that it will be quick and or cheap. Secondly, is it worth the time and the money?
We don’t do fast and cheap, well, not where property acquisition is concerned we don’t.
Let’s focus on time for now. Anyone that’s bought a house knows that it’s hardly a next day delivery kind of transaction. Turn that into a commercial property being acquired by a pension scheme, which, in all likelihood is also dropping into the role of a mortgagee and you can start to understand how, even with a tail wind and highly competent Lawyers, you will need a bit of patience.
It’s vital that we harvest quite a lot of information about all properties and then make sure it’s one that is both affordable for the scheme and complies with HMRC criteria. This involves surveyors, environmental screeners, beneficiaries, professional advisers, possibly mortgage lenders and also us.
That’s all generally before we, as Trustees, instruct a Solicitor. Sure, you can use pretty much anyone, but if you want the legal side of things to be right, to be to a very high standard (and why wouldn’t you?) then you need experts in the field. Our default experts are Coffin Mew who, in our extensive experienced are unrivalled. Much like us.
In terms of the expense, that’s very simple. Would you spend fifty grand on a thirdhand Ford Focus? No, nor would we. What about a Ferrari 330 GTO? That’s part of the picture we want to paint. Perhaps to fill in the rest we should ask; if you could save £100 every year by spending £50 once, would you do it? Yes, we would too. Imagine scaling that saving up into the thousands, the tens of thousands, maybe the hundreds of thousands without the one-off fee ever being more than a few thousand.
To conclude then, is the process of acquiring a property in a SIPP or a SSAS slow and expensive? Yes, but it’s all relative and the (likely) return on the investment puts the expense, which is met by the fund anyway, well into perspective.
Want to know more about a refreshingly honest but diligent approach to investing in property? Give us a call on 01249 280020; we’d love to chat about your project.
For a little more insight into what’s involved in the legal process and a few answers to common questions, consider a read of this article on property pension investment by the experts at Coffin Mew.