Residential Property

Perhaps one of the most common questions we receive at TLP is “Can a SSAS pension invest in residential property”?

The short answer is that purchasing or holding residential property within your SSAS directly  will incur significant tax penalties as stated by HMRC rules.

However, there are plenty of indirect, tax efficient and profitable strategies that enable you to use your SSAS to develop and invest in residential property.

For many, funding is the main barrier to achieving their residential property dreams. The traditional method of approaching banks and dealing with legal bodies, not to mention the associated fees and charges can be arduous, complex and discouraging. A method of funding that many do not realise is available to them is the opportunity to use funds held in pensions pots.

If you are a business owner, it is perfectly within HMRC rules to take control of your pension funds and invest them at your own discretion. This can be achieved by starting a Small Self-Administered Scheme (SSAS) pension.

Rather than making new contributions to a pension many of our clients transfer frozen and dormant workplace and personal pensions into a SIPP or SSAS to allow them to invest in property. This is a simple process however it is important to have an investment strategy in place, so that you can decide on the right SIPP or SSAS scheme provider for you. If you are transferring a pension you also need to consider any benefits that you are losing.

How you can invest in residential property using your pension

Find a Pension

Establish a pension that allows you to invest in a property

Find Property

Identify a suitable property for your business or investment

Purchase

Buying a property within a pension is very similar to a personal purchase

Growth

Benefit from tax-free rental income within your pension

Residential property investment strategies

The following strategy examples illustrate just some of the many ways a SSAS can be used to facilitate residential property investment, completely within HMRC rules when a hands-free strategy is employed.

The SSAS loanback facility

Within HMRC rules, up to 50% of the total value of the SSAS fund can be loaned to your company to be used for any valid business purpose. For example, the purchase or development of residential property. Many take advantage of pooling pensions with others (a SSAS can have up to 11 company or family members), to increase the SSAS pot and hence, the 50% value available for the loanback.

Loan to a 3rd party

A loan fro your SSAS to an unconnected party is allowable within HMRC rules. For unconnected loans, there are less restrictions in terms of loan size, but it must be prudent, on a commercial basis and terms of the loan can be decided by the trustees (members) of the SSAS.  Therefore, SSAS funds can be used to invest in unconnected residential property development.

Develop’ a commercial property or land owned by the SSAS, into residential property

A SSAS may purchase and hold commercial property or land, to convert to residential property, up to the point it becomes habitable. The strategy is to develop the property up to the point before it receives habitation certification. The development/property must then be sold at current market value, to yourself, your company or to a 3rd party for completion.

As the SSAS fund has increased, due to the sale of the property prior to completion, many take advantage of the increased pot and SSAS loanback facility to provide cashflow for the continued development of the residential property.

Property crowdfunding

Property crowdfunding and loans to third party property developers is an ideal way to get involved in property investment, whether residential or commercial, using your SSAS pension. Such investments earn attractive fixed returns, but they present lower risk and opportunity to diversify your investments. Property crowdfunding requires minimal specialist knowledge or time commitment.  Property crowdfunding has the advantage of diversity, security and simplicity.

The above are just a few examples of the many strategies that can be employed to facilitate residential property investment and development, using your SSAS. 

To download a guide, please click here

Key Benefits

  • Diversity – reducing risk for your SSAS funds
  • Simplicity – A hands-off investment with reduced time commitment and minimal specialist knowledge and experience required
  • Speed – The set-up and administration of property crowdfunding investments is minimal and straightforward
  • Competitive – Offering higher, regular and guaranteed fixed returns
HMRC rules

Is your pension value too low to invest in residential property? We can still help.

If the total pension value is not be enough to make a residential investment, this should not stop you from using property as the investment to grow your pension. There are many strategies to grow the pot, including combining and pooling pensions, property loans, property crowdfunding investments and more. Investments like these can be used in a 2 step process to acquire your own property or land.

For example, a 5-year investment in a Property Loan could return 60% growth, creating a much larger pension fund substantial enough to acquire a property investment. This is a strategy many of our clients use.

We have helped many people to turn their old, poorly performing pensions into a valuable pension by investing it in property.

Still unsure about something?

Please don’t hesitate to contact us about enquiries relating to pensions and investments in property.

contact us

Book your free, no obligation consultation today

What our clients say

Highly recommend The Landlords Pension for setting up a SSAS pension. Many Thanks to Liam, Michelle, Teresa and the team for their support throughout and making it an easy process. Looking forward to our working relationship with future investments.

Matthew Martin16/07/20

Highly recommend The Landlord's Pension for opening a SSAS. They are highly professional yet friendly and personable. They are really helpful and keep you informed every step of the way. It's refreshing to pay for a service by a company who actually do what they say they are going to.

Vicki Mason29/01/20

Wouldn't hesitate to recommend there services to open a SASS, massive thanks to Dan, Michelle and Teresa who made the setup seamless, very supportive throughout the whole process. Look forward to many years of successful investments with The Landlords Pension.

Angela Woods23/04/20