The Property SSAS

Invest in property using your pension funds

A Property SSAS is a Small Self-Administered Scheme pension trust, independently established for the benefit of its members.

A tax efficient vehicle for
investing in property.

What is a Property SSAS?

Unlike a SIPP, which is a personal pension, a SSAS is a corporate pension and is therefore regulated by HMRC and The Pensions Regulator. It enjoys the same benefits as traditional benefits, plus much more.

A Property SSAS must be started by the director of a trading company. The scheme can then have up to 11 members, who must be other employees and/or family members.

A Property SSAS is established to facilitate investment into property. By combining frozen and/or dormant pensions into one scheme, investment power and choice is elevated and funds are much easier to manage. Other scheme members may also transfer in their pension funds, again, increasing the pot and the choice of investments it can make. Each member retains the percentage portion of the pot, equivalent to the amount they put in, as the fund grows. As fees and charges are paid per SSAS, this means that individually, members are not managing and paying for a fund each, saving costs. All members benefit from growth of the fund and the tax advantages it affords.

Why a Property SSAS?

Property investment takes many forms. However, a common advantage that property has over investments such as the stocks and shares market, is that it is a tangible and understandable asset class. It does not share the same volatility and unpredictability that relies upon fund managers and specialist analysts to administer and coordinate.
Whether a seasoned property investor looking for additional funding, a novice keen to become involved in property or someone looking for a hands-off, limited time commitment investment, there are plenty of areas of property investment to suit your personal situation.

How does a Property SSAS work?

A Property SSAS works as a tax efficient wrapper, used to fund and grow your property investment portfolio, as well as continue to provide a growing fund for your retirement and family wealth. The succession and inheritance tax benefits are also exceptional.

A SSAS strategy must be decided upon. With this in place, the SSAS has potential to optimise tax efficiency and continue fund growth, meaning that investments and portfolio can increase. The effect of this is compounding growth of the fund, the portfolio and the business.

The Property investment strategies employed using your Property SSAS are tailored to suit an individual’s situation and goals. For example, strategies could include:

  • Investment by your SSAS into commercial property
  • Growth of the company property portfolio via a loan to your company from your SSAS.
  • A tax-free growth strategy, by selling your company business premises to your Property SSAS. Rent received by the SSAS is not liable for income tax or capital gains upon sale, within the SSAS. In addition, tax is saved by the company as the rent you pay to the SSAS is an allowable business expense. Year-end profit is reduced due to the funds paid to the SSAS, again reducing the year-end tax bill.
  • Property crowdfunding to achieve fixed returns.

Why choose property over shares?

  • Property has long been providing significantly greater returns than the average returns generated by the stock market.
  • The options are more diverse
  • Risk levels are more understandable and tangible.
  • Property is of real value that adds security to protect your funds.
  • Property is a very simple asset class to understand, unlike shares and trading, so specialist knowledge of property or finance is not essential.
  • Strategies can be tailored to suit the level of time and special knowledge you wish to invest

More often than not, it could be concluded that the stock market not only achieves lower returns, but you are in a marketplace where the value of share or stock can be wiped away at any moment, leaving you with nothing. The value offered by property ensures that everything related to your pension is transparent.

What type of property can you invest in using a Property SSAS?

HMRC rules state that a SSAS can only invest in, or hold, commercial property. However, there are plenty of options for those who wish to invest in residential property, using their SSAS.

Commercial property

HMRC rules state that a SSAS can invest in commercial property directly. Examples of commercial property include land for development, high street premises, factories, car parks, hotels or pubs, care homes, designated student Halls of Residence and much more.

Residential property

HMRC rules state that a Property SSAS can only invest in commercial property. Put simply, this means any property deemed to be habitable is classed as residential property and therefore, a SSAS may not hold or invest. A SSAS may buy or hold land or property for development, up until the point before it becomes habitable, at which point it must be sold to the company or a third party and released from the SSAS.

There are plenty of strategies that support you using your Property SSAS funds to ‘indirectly’ invest in residential property. Just a few examples include:

Property crowdfunding

Loans to third party property developers

Using the unique SSAS loanback facility to loan to your company for residential property investment

Purchase of your business premises for tax efficiency and growth

Buying your business premises with a Property SSAS

This is an ideal and popular use of the Property SSAS, which entrusts the property to the pension. If later sold, the SSAS, as a pension, generally does not pay capital gains tax on the profit. The premises are then owned by the SSAS, but as it is your Property SSAS, the asset is essentially still controlled by you. There is no involvement with 3rd party landlords. Rent you pay for the premises is classed as a business expense, so your company is afforded corporation tax benefits on payments to the SSAS and the rent the scheme receives is not liable for income tax, all potentially helping to grow the pot.

Buying development land with a Property SSAS

A fantastic privilege of a Property SSAS pension is that it can purchase, own, and develop land and/or commercial property. This brings extensive tax advantages, including:
• Tax relief on any contributions paid into the SSAS, towards the land or property purchase
• Gains in value of the property are free from Capital Gains Tax within the SSAS
Land for residential property development may also be purchased by a Property SSAS and developed right up to the point of becoming habitable. This means the land ‘must be sold’ at market value, to yourself, your company or a 3rd party, prior to being deemed habitable, so prior to completion. At this point, a common strategy is to make a loan of up to 50% of the total Property SSAS fund, using the SSAS loanback facility, to use to fund the completion of the development.
It is important to ensure you have the correct support for your Property SSAS strategy to ensure it adheres to HMRC regulations and is optimised for long-term success. The Landlord’s Pension are experienced Property investment, Pension and Business experts. We offer a full SSAS service, which ensures that you are equipped with the tool, knowledge and ongoing support, for your Property SSAS.

What is Property crowdfunding?

Property crowdfunding is a very popular choice for many SSAS schemes as it offers a hands-off, lower risk route into property investment. Property loans and property crowdfunding earn a fixed rate return over a set period, with this loan being repaid in full at the end of the investment term. By opting for a property crowdfunding portfolio, you can ensure simple, secure and diverse investments across the main sectors of UK property, such as Residential, Commercial and Buy-to-Let, to consistently grow your SSAS pension. The investment cycle can be repeated, taking advantage of compounded growth for your SSAS fund.

Property crowdfunding has the added advantage of affording hands-off investments for inexperienced property investors, with smaller pots or those without the available required time commitment for direct & individual property investments. Whether you are a seasoned property investor or a novice, this type of property investment is the ideal solution for those wishing to be involved in property, whilst keeping time investment and fees minimal.

What is a Property SSAS compared to a normal SSAS?

A Property SSAS is administered by people who know and understand property investments. A Property SSAS allows you to make all the same investments as a normal SSAS but when it comes to making an investment in property you want property people to be there to answer your questions immediately and to deal with the process of acquiring or disposing of property promptly.

What are the extra investment options available with a SSAS over a SIPP?

The main additional benefit of a Property SSAS is that you can transfer 50% of the value of any pension you have contributed to into your company for use in your business. This is the cheapest way to access money for your company. Why go to the bank with all the red tape and hoops they make you jump through when you can simply draw on your old pension schemes instead? The money can then be used for property investment or property development, cash-flow or stock acquisition, specific to your business.

This is a great way of accessing tax-free money in your pension for use in your business. There are special rules imposed by HMRC if you are planning to transfer 50% of your pension, which we are familiar with. We will help to ensure you meet the obligations you must undertake.

Do I need investment experience, qualifications or high net worth status to start a Property SSAS?

No, the only requirement is that you are the director of a trading company in the UK. As a company director you will be familiar with making executive decisions, which is what you will be doing with your pension. Most SSAS pensions are used for property investment which is also our area of expertise, so we can help if needed.

How can I find out if I’m eligible for a Property SSAS pension?

You can take our quick 60 second eligibility test to find out, or you can get in touch on 01235 426666 or emailing enquiries@thelandlordspension.co.uk

How does property crowdfunding work?

Example:

  • A developer plans construction project.
  • Rather than seek finance from banks or other lenders, the property developer takes property loans to raise the funds they will require to complete the development.
  • Land (for example) purchased for development of the project, as well as the development itself are offered as security for those lending to the developer, i.e., you.
  • The lender is one of several lenders, loaning to the developer or project.
  • Property loans are usually for a fixed term, typically between two and five years.
  • The developer uses the money raised to proceed with the development project.
  • Depending upon the property loan term you choose, returns will be at a fixed rate, paid periodically (monthly, quarterly, annually etc.) as agreed in the loan terms.
  • At the end of the agreed fixed loan term, the original loan fund total is returned to the lender, along with any returns owing.

Many SSAS scheme members are attracted to property crowdfunding due to its diversity, simplicity, and security. Some choose to invest all their SSAS funds in property crowdfunding and others use a portion of the pot to ensure growth in the background, as part of their investment strategy.

What is most appealing feature about a Property SSAS?

You can invest in property, it is low cost, you are in control, you get all the tax breaks associated with any other pension and you get to invest in the full range of permitted investments allowed under UK legislation. A Property SSAS is a great business pension too because it can fund your company when you need cash to start or finish projects.

Essentially, you can pool all your former pensions into a Property SSAS pension. You may also draw on SSAS funds to a maximum of 50% of their combined value, to loan to your business.

Are there any other benefits of a Property SSAS over a Property SIPP?

It is possible to pool your pensions with other company directors or family members to give you a bigger fund to make investments. This often happens when a large property acquisition is made, and greater funds are required. We tend to find this happens when a board of directors combine pension funds to acquire a freehold property to run their business from.

Another frequent scenario we experience is where a husband and wife, who are involved in a small business, combine their pensions to give a larger pot. However, the sums invested remain with the party that invested them, so for example if one party invested 75% of funds and the other only 25% then this is how the split of the pension remains, it doesn’t suddenly become 50/50.

Are there any drawbacks to Property SSAS?

There are no drawbacks. A Property SSAS gets all the same benefits as any other UK pension scheme, such as tax breaks, lifetime limits, drawdown age and 25% tax free cash at age 55 along with the new flexi-drawdown rules. A Property SSAS is the ultimate property and business pension.

Most people take little interest in their pensions but when they realise the many benefits of a Property SSAS and how the money locked in a pension can be used in a small company, the SSAS pension suddenly becomes a very attractive tool to have as a part of your business plans.

What are the consultation fees?

The Landlord’s Pension offer a free, no obligation SSAS consultation to help you discover whether you are eligible for a SSAS pension, and to discuss how you could use the SSAS to grow your business. Simply get in touch on 01235 426666 or email enquiries@thelandlordspension.co.uk

How do I start a Property SSAS Pension?

The ideal starting place, when thinking about a Property SSAS Pension, is to understand how it will work for your personal situation. The Landlord’s Pension offer a free 15 minute, no obligation conversation with one of our experienced consultants, to answer any questions you might have and help you decide whether the Property SSAS is for you.

Our consultants are experienced in pension, property, business and tax. A dedicated consultant will call at a time to suit you to offer property SSAS pension advice and help you to understand how, at any age, you can use your pension to invest in property.

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How can The Landlord’s Pension help me with a Property SSAS?

We are dedicated SSAS pension brokers, this is our area of expertise. We will listen to what you are trying to achieve and if your goal is possible, then we will work together to build your strategy for SSAS success, including lifetime SSAS setup, selecting the most suitable professional trustee, registration with HMRC, a dedicated and experienced consultant, ongoing learning and much more. We are thorough and can normally tell you on the phone if we can help you within a few minutes.

Our initial consultation aims to understand your situation and your goals,. We will need to know what you currently have in terms of your pensions, your age and what your intentions are. Speak to our consultants about your pension options.

Can I transfer current, frozen, or former company schemes into a Property SSAS?

Yes, many people do this. You simply contact your existing pension provider and ask them to transfer the old pensions into your new Property SSAS. This is very straight forward and is the most common way people start a new Property SSAS. Your old pension provider will send some paperwork in the post which you need to sign and return to them.

You should consider any benefits you are giving up by transferring your old pension(s), as these may be lost when you transfer your pension funds. You can ask your pension provider to give you this information in writing or over the phone.

Who can set up a Property SSAS?

A Property SSAS can only be set up by a company director, however the company can be of any size in terms of its turnover, profits and staff numbers. The Landlord’s Pension has consultants that can help to set up the right Property SSAS for you. Please contact us by calling 01235 426666 or emailing enquiries@thelandlordspension.co.uk

Do I qualify?

Take our 60 second eligibility test to find out if you qualify

Do I qualify?

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