SIPPs and Commercial Property

Neverland

CannySaver wrote: »

No you can't the rent has to be arranged on a commercial basis, you could therefore do nothing that you wouldn't do to a third party tenant. The SIPP provider, as trustee (remember you are not the owner, merely the beneficiary) would expect the rent to be paid as per the lease agreement, you can't simply "forgive" the rent as you put it.

The Canny Saver

Have you any experience of SIPP trustees foreclosing actually on their clients and sending the baliffs in?

I would expect them to just write to you and say your rent is late

pj2503

Thank you for all your comments so far, I will digest all your comments and reply when I think I understand them. Thank you for advising I should start my own thread...and I would if I knew how...as mentioned a total newbie !!!
Thank you

atush

on the main page (ie one back from this) at the top on the left is a blue button marked New Thread

pj2503

As mentioned thank you for all advice so far, to put as bit more meat on the bone, my wife has/had a very good final salary pension that is about to be converted to a defined contribution scheme which is going to reduce her pension by about a third, we also have a second home which when required will form part of our pension by selling when we decide to retire. I am a bit of a maverick when it comes to investing and not comfortable in placing monies in to a pension plan as feel that I am lining other peoples pockets rather than my own, hence the thoughts of a Sipp and because I run my own busines of which I am the soul director, have the opportunity to invest a Sipp in a commercial property. The type of premises we use for my business would not be worth investing in so would be looking to invest in alternative industrial properties, funded by my business. I was also going to maximise ISA's broaden our options.
The downside.... I was looking to retire at the age of 55, which I believe is the earliest age I can purchase annuities which is only 6 years time, so my thinking was the rental from industrial property would give me a small income.
As you can see I have alot of thoughts and options with little structure or plan, or to be honest idea. All thoughts comments appreciated, a steep learning curve is ahead of me...
PS thank you for guidance on styarting a new thread....

CannySaver_2

Neverland wrote: »

Have you any experience of SIPP trustees foreclosing actually on their clients and sending the baliffs in?

I would expect them to just write to you and say your rent is late

My understand is that the Trustee of the SIPP would work with you as a tenant to make arrangements for the rental arrears to be paid, ultimately if it is not then under the terms of the lease they could ask / make your business leave the premises.

I guess the Trustee may be more sympathetic in how they handle the situation, but they would certainly want the back rent and would not allow it to be written off, unless it could be proved that the same action would be taken with a third party tenant.

I had a friend who had shops in a SSAS, his rent was significantly late, the Trustee persued him for the rent and would not allow the shops to be sold until the back rent was paid.

The Canny Saver

CannySaver_2

pj2503 wrote: »

As mentioned thank you for all advice so far, to put as bit more meat on the bone, my wife has/had a very good final salary pension that is about to be converted to a defined contribution scheme which is going to reduce her pension by about a third, we also have a second home which when required will form part of our pension by selling when we decide to retire. I am a bit of a maverick when it comes to investing and not comfortable in placing monies in to a pension plan as feel that I am lining other peoples pockets rather than my own, hence the thoughts of a Sipp and because I run my own busines of which I am the soul director, have the opportunity to invest a Sipp in a commercial property. The type of premises we use for my business would not be worth investing in so would be looking to invest in alternative industrial properties, funded by my business. I was also going to maximise ISA's broaden our options.
The downside.... I was looking to retire at the age of 55, which I believe is the earliest age I can purchase annuities which is only 6 years time, so my thinking was the rental from industrial property would give me a small income.
As you can see I have alot of thoughts and options with little structure or plan, or to be honest idea. All thoughts comments appreciated, a steep learning curve is ahead of me...
PS thank you for guidance on styarting a new thread....

A few comments:

1. It would be unusual for your wife's Final Salary scheme to be converted into a Money Purchase scheme. It is more usual for benefits in the FS scheme to be preserved and future contributions go to the MP scheme

2. Please think very carefully before you transfer the FS scheme into a SIPP to buy commercial property. She will be giving up valuable benefits in the FS scheme (guarantees, no investment risk, index linked pension) to invest in commercial property with no such guarantees. There are a large number of SIPP commercial property providers, and if you look at the link given most will accept FS transfers, but only if advised by an IFA, this shows the importance of taking advice before giving up benefits in a FS scheme

3. If you are looking for a more strategic approach to your arrangements why not speak to an IFA? They will be able to put some structure behind your thoughts and ideas

4. 55 is indeed the earliest age you can take pension benefits, although you don't now have to buy an Annuity at any age, least of all 55 when rates will be poor. Most people with commercial property in SIPPs will use Income Drawdown to recieve their tax free lump sum and income payments, which is generally met by the rent

I hope these comments help.

The Canny Saver

pj2503

Thank you Canny saver for your logical response, I think I may have misled you with regards to my wifes pension arrangements, you are quite correct her FS scheme is going to be preserved and future contributions wil be going to the MP scheme. We have no intention of transferring her FS scheme with a commercial Sipps, was just wanting to portray the breadth of our retirement plans.
I think I have come to an arrival point which you have suggested of speaking with a IFA, which I have always steered away from as such horror stories are publicised and such contradictions amongst advice. Hence I guess why we tend to merge to forums as this as there are no hidden agendas !!
I think my route forward is to source out an IFA who also has the recognised qualifications to advise in Sipps as well.
Thank you again....

dunstonh

I think I have come to an arrival point which you have suggested of speaking with a IFA, which I have always steered away from as such horror stories are publicised and such contradictions amongst advice.

IFAs have under 1.5% of complaints at the FOS despite dominating the regulated product distribution channel. Most of the issues have come from FAs,not IFAs and nowadays you see very few issues. Nothing is perfect but the fact issues are quite unusual nowadays means when they happen, they get published.

Investing is about opinion. You are always going to get differences in opinion. You are also going to get differences in product provider based on experience, opinion and terms offered (which can vary from firm to firm).

Hence I guess why we tend to merge to forums as this as there are no hidden agendas !!

Given some of the recent posting, there has been a lot of posting by some with the agenda not too hidden.

I think my route forward is to source out an IFA who also has the recognised qualifications to advise in Sipps as well.

There are no qualification for SIPPs. SIPPs have exactly the same legislation applied to them as personal pensions and stakeholders.

You need a pension transfer specialist qualification (like AF3). You would also expect the advice, based on statistics, to be that the pension should not be transferred (unless it has to be)

Neverland

CannySaver wrote: »

My understand is that the Trustee of the SIPP would work with you as a tenant to make arrangements for the rental arrears to be paid, ultimately if it is not then under the terms of the lease they could ask / make your business leave the premises.

I guess the Trustee may be more sympathetic in how they handle the situation, but they would certainly want the back rent and would not allow it to be written off, unless it could be proved that the same action would be taken with a third party tenant.

I had a friend who had shops in a SSAS, his rent was significantly late, the Trustee persued him for the rent and would not allow the shops to be sold until the back rent was paid.

The Canny Saver

I have some acquaintances who own some shops and restaurants

One of their tenants missed their last two quarterly payments

The baliffs went in a couple of days after the last (Jan) quarter day payment was missed and seized the property

The landlords have also kept the rent deposit the tenant gave them

They've now let it again agreeing a lease premium and another rent deposit

Nice piece of business for the landlords and all legal, I guess

This is the difference in having your pension fund as your landlord and a professional landlord