Investments

Property

A SSAS can be used to purchase freehold or leasehold commercial property and land. It can purchase the property on the open market or from a connected party such as a member, a member’s business or a person connected to a member. If the property is purchased from a connected party then the purchase price must be the open market price supported by a professional valuation.

The property can be leased to a third party, or to the members’ business. If the property is leased to the members’ business, then:

  • The lease must be granted on commercial terms; and
  • The amount of rent payable must be at a commercial rate and again supported by a professional valuation.

A SSAS cannot be used to purchase residential property including ground rents (even if it is to be converted to commercial use and planning permission for such a conversion has been obtained). A SSAS can only purchase residential property in the specific situation where it forms a part of a commercial property, such as a caretaker’s flat occupied by a non-connected employee as condition of his or her employment.

Commercial properties with a residential aspect, such as hotels, guest houses and nursing homes, are permitted as long as the members (or any other connected parties) do not use the facilities other than at a commercial rate.

A SSAS can purchase commercial property jointly with other pension funds as well as with the members, their business or other parties. In this case, the participants will each own a percentage of the property which is determined by how much they contribute towards the purchase price.

If the property is subject to VAT then we will register the scheme for VAT, which will enable us to reclaim the VAT paid on the purchase price. All rent charged on the property will also be subject to VAT.

A SSAS can develop any land or property that it holds but the cost of the development must be met by the scheme. If the SSAS opts to tax the property for VAT purposes then it can reclaim the VAT paid on contractor’s invoices.

D A Phillips & Co Ltd must be a co-owner of the property together with the member trustees.