Why investing in property is still safer thank you might think. What Covid-19 means for property investment. How safe are our existing property investments and how risky is future investment?
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Director Gareth Bertram talks to Jeff Lermer, Director of JLA accounting about supporting SME businesses through Covid-19 and how to access business funding through pensions that you have paid historically into.
Without doubt, the primary advantage of a SSAS pension, is control.
So how does a SSAS offer you more control you ask. Well, the clue is in the name; SSAS is an abbreviation for a Small, Self-Administered Scheme and ‘Self-Administered’ is where you gain control. A SSAS pension is essentially, all about you!
Many company directors are eligible to use their former employer or private pension funds as a source of cash to fund their current business, yet very few are aware that this is an option. This is achieved by using the little known business SSAS pension.
Steve Brazil, Property Investor and Co-founder and Director of Inspire Property Partners Ltd highlights the reasons all business owners should be aware of the SSAS Pension
Case studies and testimonials from our clients
Businessman Alastair Fry, 54, of Oxfordshire, luckily avoided the 2018 pension stock market crash by successfully moving his funds just in the nick of time. He then invested his pension in property. This month he shares his story of how simple it was to get out of the volatility of stocks and shares that he didn’t understand, and into property. Alastair told us “It could have been so different, I could have had tens of thousands wiped off the value of my pension fund due to the crash late last year. It was formerly managed by a financial advisor; the money was invested in the stock market. I didn’t really understand it all, which I’m told is a familiar story for many people. It was during a business networking meeting that I learned that I didn’t have to wait until I was 55 to invest my pension in property which is an asset class I understand. I made the decision to transfer out immediately. I also discovered that I could invest part of my pension into my own business and so I am in the process of taking some money out of the pension and loaning it to my company. My company will then have a cash injection to help with the day to day running. The key to all of this is that I am in control of my pension funds now, not the financial advisor. I choose what I do and when. The amount of flexibility and control I have gained is incredible.” “Stocks & shares are a gamble, property is far more predictable” Just by chance, Alastair managed to avoid the stock market crash of 2018 that saw as much as 40% wiped off the value of UK pension funds. “To say I’m pleased is an understatement, but I must admit it was only by chance – who knows when the market is going to crash? I got lucky and transferred my pension at the right time. I’ve now invested my pension in property and I’m generating a fixed return. I feel this is much more stable than stocks, which as far as I can see are only a gamble. My advice to others thinking of transferring their pension into property is to get on and do it; much to my surprise, it’s an incredibly straight forward process. Alastair also reduced his costs substantially by moving his former stock market pension into a Small Self-administered Scheme (SSAS) pension. He now pays a single fixed fee each year rather than a percentage of his fund. “I feel this is much fairer. I pay a fixed fee regardless of the size of my pension. Many people are paying too much for very little in return.” As he approaches his 55th birthday, his eye is heavily focussed on his 25% tax-free lump sum. “With the help of my new SSAS pension broker, I’ve planned my investment strategy so that I can access my lump sum in a few months’ time. I have personal plans for this money, and it will be paid out to me within a few days of turning 55 – a nice birthday treat indeed.” If you’re concerned about your pension losing value in the stock market and want to consider property as an alternative then speak to The Landlord’s Pension
Richard Hutchins, 64, of Hayling Island near Portsmouth has made substantial gain by investing his pension in property since 2012. This month in YPN he tells us what he’s done and how he did it. Richard explained: “About 6 years ago I started working with Gareth Bertram of The Landlord’s Pension, he’s a property investment expert who works with property pensions. Rightmove were jointly promoting how to invest your pension in property with Gareth’s company so I got in touch with him. Gareth explained to me how I could invest my old pension plan in property, something I didn’t know was possible. After undertaking some due diligence and reviewing some options, I decided this was the right thing for me to do. I had always had an interest in property, but my pension was invested in stocks and shares that I did not understand so making the switch was an easy and obvious choice. It’s been a wise decision because my pension value has nearly doubled since I first met Gareth.” ‘My pension has nearly doubled in value’ Richard continued: “I started the process by moving my old pension plans into a single pension plan which at the time was a low-cost flexible option for me. The investment term was 5 years and during this time I had very little to do with the money. I had opted for ‘hands-off’ property investment, meaning that I could benefit from investing in the property market without being involved in the day to day developments undertaken. This suited me perfectly because I have been running my own business as an Optician for many years – I certainly couldn’t do both at the same time! There were options to invest for as little as just 1 year but I felt it was better to make the 5 year investment and let the money work for me.” “I had already taken my tax-free lump sum when I turned 55 but I am now planning to start drawing further income from the pension. This is where things get exciting because although I am drawing income, my pension remains invested and continues to generate a return from the property market. The return is paid to my pension every 6 months which I can then draw out and use for any purpose. What is perhaps not immediately obvious is that the capital value of the pension does not reduce because I am simply drawing the income that the invested capital is producing. I can take more capital if I wish to in the future or I can leave it as an inheritance.” Richard has a SSAS Property Pension which is exclusively available to company directors. This is a low-cost property pension that is afforded special status allowing him to invest in property. Richard’s story is one of many that we have showcased on behalf of property pension experts, The Landlord’s Pension. This article once again highlights the importance of not ignoring former employee pension plans because this is often the capital injection people may need to start investing in property. It’s important to note that although Richard was over the age of 55 when he started investing in property with his pension, he could have done so at any age because there are no age restrictions on using pension funds to invest in property.
Howard & Kathy Cain, Asana Property Investments Howard Cain worked in financial services for 35 years helping to train IFAs “I really only touched on SSAS pensions lightly from a technical point of view. In fact I assumed that when I left work I would simply take my final salary pension and that would be it!” Having built a successful property business and seeing the value in property investment, Howard and his wife Kathy set up a monthly networking event in Bolton called the Asana Property Meet which has become the go-to networking event of the North-West for property investors. Kathy saw a presentation by Mike Holt of The Landlord’s Pension explaining how it is possible to invest in property using Property SSAS (Small Self-Administered Scheme) pensions. “Despite being qualified, SSAS is a specialist area and I didn’t fully know how they work or realise how they could help us build our property business. We invited Mike to present at the Asana Property Meet and he delivered a really sharp and informative session demonstrating that Mike really knows his stuff and knows how to deliver a message effectively”. After discovering the benefits of SSAS pensions and seeing how these funds could be used to grow his property business and increase his pension fund, Mike worked with Howard and put together a plan outlining the various strategies for investing in property using pension monies that were currently tied up in an old company pension scheme. “The learning curve for SSAS pensions and how they can be invested is a steep one, however Mike took the time to explain everything to us in plain English and we felt confident we could better utilise our pension fund by taking control and investing in property”. As a Director of his own property company, Howard was eligible for a SSAS pension which gave him the control and flexibility to invest in property in a variety of ways and even to lend money back to his own business. “The team at The Landlord’s Pension made the process of establishing my SSAS pension straight forward and kept me informed through the entire process”. Howard now has a SSAS pension and with the help of The Landlord’s Pension is investing in various property investment strategies. “My overall experience working with The Landlord’s Pension is that they have been extremely helpful and proactive throughout the process. The continued professional service and ongoing support I have received has been exceptional and I would not hesitate to recommend their services. My ‘advice’ to anyone in property considering a SSAS pension is to get it started now – no need to wait until you’re my age! ”. When Mike Holt spoke to YPN he confirmed “It has been my pleasure working with Howard and Kathy. I meet property investors and business owners up and down the country who often overlook historic pensions they have contributed to. At The Landlord’s Pension we are changing peoples perception of pensions. Rather than seeing this as money that you cannot touch until you reach the age of 55 we encourage our clients to see their pensions as assets which can be utilised to build or grow their property business today.”
Featured in “Your Property Network” magazine October 2018 Bristol pin meeting host and property investor Nick Josling set up his own SSAS Property Pension about 4 years ago but only recently realised the value of adding his wife Hayley to the pension. Now having amalgamated their pensions into one pot they have increased their investment power substantially. Nick explained “I was going through some paperwork with my wife and we realised she had some funds from a former employment position with a retail bank. We got in touch with Gareth Bertram, Director of The Landlord’s Pension (a leading SSAS property pension broker) and he confirmed that it would be possible for us to move her funds in with mine”. Nick continued “This is great for us because we now have the opportunity to invest at a far greater level whilst retaining ownership of our own funds in the combined pension pot”. The beauty of an arrangement like this is that one partner does not automatically gain any control over the other’s pension fund, but if both parties are in agreement, then they can buy investments together using the combined fund. With Nick having set up his own SSAS back in 2014, it was quite simple to add in his wife as another Member of his scheme. Both Nick and Hayley are heavily involved in the property sector in Bristol, running a successful lettings business, managing their own portfolio and most recently developing some sites too. With some help from their SSAS advisor Gareth, they are now looking at the most tax efficient, low risk plans for growth of their business and pension fund. Hayley commented “I’m really excited about the options we have to further our business interests in the property sector. It’s amazing that I’ve been sat on these old pension funds for years and not known that I could have been putting them to better use”. The Landlord’s Pension have helped many couples combine their pension funds bringing those people greater control over their finances and enhanced success in the property sector. However, combining pensions into one pot is not limited to just couples or those co-habiting. Relatives and unrelated co-Directors or business colleagues can achieve the same. When YPN caught up with SSAS expert Gareth, he explained more. “SSAS pensions can actually have up to 12 members, so that’s the combined power of 12 individual’s pensions that could go into one pot. We rarely see this though because there can be no single figure of authority in a SSAS pension and everyone needs to agree on the investment strategy. As the saying goes – too many cooks spoil the broth! In most combination cases we see a mature family of up to 4 members bring funds together or a small group of directors in the same business with a vested investment interest such as the acquisition of commercial premises”. If you’re considering a single member or multi member SSAS Property Pension then download a free guide from the web page listed below. Alternatively you can call to speak directly with an experienced SSAS consultant for free advice. To find out whether you could benefit book your FREE SSAS pension consultation with our of the experienced Advisors at The Landlord’s Pension.