HELP new SIPP to buy a new business property

rainee

HELP!!
hubby and I need to buy a business property and have decided to use our pensions to fund it.
Any ideas on who to use etc who dont charge massive amounts !
the company moving in would pay rent per month

dunstonh

Any ideas on who to use etc who dont charge massive amounts !

You will pay a lot in fees regardless of where you go. It is an expensive transaction due to the massive amount of work and awkwardness of doing this.

You better have a good rental yield (higher than 7%) if you want to make money from it otherwise it is a complete waste of time.

Property purchase is best when its your own business and having access to the funds in your pension helps your cashflow. If you are using it for investment purposes then using commercial property funds is a far better way. Although now isnt the time to be going into commercial property as that is trending down in value quicker than residential at the present. Although it should recover before residential if history is anything to go by.

EdInvestor

AJ Bell
Suffolk Life
Hornbuckle Mitchell
are all established SIPP providers who do property.

It's not cheap though.

rainee

yes its for us (the building that is!)

dunstonh

I would suggest you go to an IFA that is experienced in commercial property purchase in a SIPP. This may take some calling round as it is not an everyday transaction. Many IFAs dont or wont do it. I did one once before and it was far too time consuming and I made the decision not to do one again personally. Apparantly, that one went smoothly as well but it didnt feel like it. By the time the accountant, trustees and initially the different providers (as different trustees from the SIPP providers have different views and rules) all got involved, I felt like piggy in the middle. Which of course, is the role of the IFA in this transaction. But it wasnt fun. If you are going to do it without an IFA then prepare yourself for that.

There are some negatives to purchasing the property within the SIPP. An IFA will let you know these once they ascertain your position and information. If you dont use one, then the SIPP providers have no responsibility to make you aware of these risks if you go direct to them. So if you go direct, make sure you do your research.

EdInvestor

dunstonh wrote: »

There are some negatives to purchasing the property within the SIPP.

It's certainly nothing like as attractive as it was before they changed the borrowing limits.