Can a SSAS Pension buy residential property?

A comprehensive guide to Pensions and Investments for Investing in Property

Can I use my pension to buy residential property?

Perhaps one of the most common questions we receive at The Landlord’s Pension is “can I use my pension to buy residential property?” There are two ways of answering this question the first in the strictest sense is yes a pension can purchase a residential property however HMRC class residential property as “taxable property” within a pension scheme and therefore impose a tax of 55% of the amount invested. So in reality no you cannot purchase residential property directly or indirectly within a pension scheme. You can read HMRC rules around “taxable property” directly on their website by clicking here

Can I make a business loan from my pension to my limited company?

One of the unique benefits of a SSAS pension is the ability to make a business loan from your pension to your limited company, this is often referred to as a “SSAS Loanback”. There are several HMRC rules in place regarding this type of loan but if you are running a genuine trading limited company these can usually be met. The loan from your SSAS pension to your limited company can be used for any genuine business purpose therefore if your property happens to be a property development company for example that purchases residential property then in theory a SSAS loan-back could be used for the acquisition of new assets within your limited company.

How does a loan-back work in practice?

A good way to understand how this works would be to look at a case study as an example of how this can be used in practice. This case study is a real case study from one of The Landlord’s Pension clients called Andy. He had existing pensions from old employers with a total value of £600,000 with our help he established a Small Self-Administered Scheme pension which opened the door for a loan of up to 50% of the value of his fund (£300,000). Andy Identified a run down property in Cornwall that he wanted to purchase within his trading property business with the intention of redeveloping the property and selling. The property was for sale for £200,000 but due to the speed at which Andy was able to complete on the purchase he was able to negotiate the price down to £150,000. Using the SSAS loan-back he drew down a loan of approximately £190,000 and simultaneously gave the pension scheme a first legal charge over the property he was purchasing. This loan covered the purchase price and the majority of the costs involved in purchasing, developing and selling the property. Once the work had been completed the property was sold and proceeds used to repay the SSAS loan-back along with a healthy interest payment back into the pension. The profits from the development were then retained within the limited company.

Where can I learn more about SSAS loan-back rules?

The above is a very straight forward example of how using a SSAS pension and a property development company it is possible to utilise pension funds for the acquisition of residential property within a limited company. You can read more about the SSAS loan-back and understand the rules that must be adhered to by clicking here

What is the next step towards starting my SSAS pension?

This type of structuring of loans and investments within a SSAS pension is a very specialist area and something The Landlord’s Pension have a wealth of experience in. If you are considering using a Small Self-Administered Scheme pension to grow your business and have questions over how this could work you can book a FREE initial consultation with one of our SSAS advisors by clicking here

Or call us on 020 3907 8400

What our customers say...

  • Simon and Teresa have helped me to gain control of my pension and now I am able to invest it in property through a fund with high fixed returns. I will also be able to use it on my own purchases / projects, which gives me much more cash access... Read more

    Martin Littleboy Avatar
    Martin Littleboy
  • positive review We had a number of workplace and final salary pensions, dotted all over the place and decided to pull them all into one SSAS. Laura and the team were excellent in explaining what to expect and keeping us advised every step of the way, in fact as part of... Read more

    Rosemary Wooding Avatar
    Rosemary Wooding
  • positive review Mike Holt and his team have been awesome getting my SSAS set up. All ready to go in record time and looking forward to building the pension pot, tax-free!

    Jeroen Hoppe Avatar
    Jeroen Hoppe
  • positive review Really professional company.
    I’ve pointed a few clients their way that want to release ‘dead’ money from their pensions to invest in higher returns.
    Gareth really knows his stuff and Teresa is super efficient.

    Nick Carlile Avatar
    Nick Carlile
  • positive review Genuine professional people delivering top notch quality customer service accompanied with the all important experience and in-depth knowledge of this business field.
    Many thanks in particular to Gareth and Teresa for their unswerving support advice and guidance over these past few years since I took up the challenge of looking after...
    Read more

    Nick Clement Avatar
    Nick Clement

The Landlords Pension is an expert in this niche sector of financial planning and have been helping clients to invest in property since 2004.