What your pension can actually buy
Most guidance that you will find online talks about the potential to hold commercial property in a pension and establishes that it can be done. Less of it answers the question people arrive with, what are the next steps.
Written by Max Reeves, Director, Developments. Last reviewed September 2026.
We have syndicated commercial property for over forty years and a good proportion of the stakes we place are held by pension schemes.
Start with the fund, not the building
A scheme buying outright is limited by what it holds, less what the purchase costs to complete and what the scheme must keep back.
Stamp duty land tax on non-residential freehold purchases runs at nil to £150,000, 2% on the slice from £150,001 to £250,000, and 5% above £250,000. On a purchase at £275,000 that produces £3,250.
Legal fees, valuation and survey sit on top, IRO £6,000 to £10,000 depending on the property. The scheme also needs to retain cash against administration fees, insurance and any void, because a building cannot be sold in slices to cover them.
Allowing for all of that, a fund of £300,000 secures a property of circa £275,000, and a fund of £400,000 reaches circa £370,000. The method is worth applying to your own figures rather than taking ours.
A note on borrowing
Borrowing is permitted. A registered scheme may borrow up to 50% of the net value of the fund immediately before the borrowing takes place, and existing borrowing counts against the same limit.
We do not use it. None of our syndicates carries bank debt or any charge over the asset, and every purchase is funded from investor equity. Gearing raises what a fund can reach and it raises the risk alongside. The loan is serviced whether or not the tenant pays, and a fall in value falls first on the equity.
That is a house view rather than a rule, and an adviser may reasonably take a different one. We set it out here so that the figures above are read for what they are, which is the unleveraged position.
What that secures
At £275,000 in most of the country the realistic purchase is a single small unit on a secondary pitch, or a modest suite within a multi-let building, held on an FRI lease to one tenant.
The whole of the fund's property exposure then rests on that covenant continuing to pay. If the tenant goes, the passing rent stops, and the scheme continues to meet rates and insurance from its own resources. Empty rates relief is time limited and the liability returns.
Dilapidations are worth a thought at the same time. A claim at lease end can be worth having, and it can equally be argued down to very little, so we would not underwrite a purchase on the strength of one.
This is the point most guidance skips. Concentration is the real cost of buying a whole building with a fund of that size, and it only becomes visible when something goes wrong. Helmsley Group has bought, let and managed enough small single-let stock over four decades to say that plainly.
When the fund falls short
For most schemes it will. A fund reaching circa £275,000 is not competing for the stock that trades well through a downturn, and buying the best available at that figure is a different exercise from buying something worth holding for twenty years.
The usual advice at this stage is to club together with others, which is described in the abstract far more often than it is explained.
Several schemes each take a share of one building and hold it directly. Each scheme owns its percentage, receives its share of the rent after costs, and bears its share of those costs. The structure is tax transparent, so the scheme's own exemptions apply to its share.
Our own syndicates are held on that basis, as direct co-ownership rather than through a corporate or partnership vehicle. The distinction is not cosmetic. The statutory exemptions on scheme income and gains do not extend to holdings through a property investment limited liability partnership, so the wrapper deserves checking before the cheque is written, whoever has arranged it.
The trade-offs should be stated plainly. The individual scheme does not control the asset, decisions are taken collectively, and there is generally no established secondary market in shares of this kind. A share can take months to place and may realise less than was paid for it.
Against that, a fund of £300,000 can hold part of a £4m building let to an institutional covenant rather than the whole of a £275,000 one let to a local trader. Whether that trade is worth making depends on the scheme and on the member, and it is a question for an adviser rather than for a web page.
What to settle first
A few things are worth clarifying before any decisions are made.
Provider acceptance. Not every scheme will hold an asset of this kind. The reasons are structural rather than arbitrary, and we have set them out separately. Helmsley works with a partnership of established advisers who understand our syndicated product.
Fees. Property brings transaction fees, annual fees and usually a recurring valuation requirement, and the schedule should be obtained in writing.
Benefit age. An illiquid asset and a member wanting to draw benefits is a known difficulty, and it should be anticipated at purchase (and revisited as the member approaches it).
Sources
Borrowing limit and the aggregate test – HMRC Pensions Tax Manual PTM124000. Exemptions on scheme investment income and gains – section 186 Finance Act 2004 and section 271 TCGA 1992, summarised at PTM121000. Stamp duty land tax rates – GOV.UK, non-residential and mixed rates.
This page is general information and not advice. Investment in commercial property, whether directly or through a shared structure, puts capital at risk. Values and rents may fall as well as rise, tenants may default, and holdings of this kind may be difficult to realise. You should take regulated financial advice, and appropriate legal and tax advice, before making any decision about your pension.