Whether your scheme will accept a share of a building

We raise it at the first conversation rather than the last. Helmsley work with a panel of established providers who understand our syndicated investment product.

Why providers differ

Every pension provider sets its own rules on what it will and will not hold. Some accept shares in co-owned commercial property. Others decline them as a matter of policy, and a few will consider them case by case.

A refusal is not a view on the building. It reflects how that provider is regulated, how it is set up and what it has chosen to administer, and the same holding can be refused by one scheme and accepted by another in the same week.

There is therefore no general answer to whether your scheme will accept a stake, and nobody can give you one except your own provider. What matters is asking early, asking precisely, and getting the reply in writing.

A SSAS sits differently

A small self-administered scheme is an occupational scheme, and the member trustees take the investment decisions between them. In practice that usually means more room to hold an asset of this kind.

It does not mean a free hand. The scheme administrator still carries the HMRC duties, the rules on what a pension may hold apply in full, and any transaction with a connected party must be priced at arm's length. Getting that wrong produces tax charges that can reach a substantial proportion of the sum involved.

What to put to the provider, and when

Six questions are worth putting in writing before anything is agreed.

Whether it permits holdings in co-owned or syndicated commercial property, and on what terms. What it charges on acquisition and annually for an asset of this type. What valuation it requires at purchase and at what interval afterwards, and who bears the cost. What it requires on legal title and on the co-ownership documentation. How long approval takes, and what would cause a refusal. And, should the scheme later seek to dispose, what its process and requirements are.

We would ask all six before terms are agreed on any building, not after. An approval obtained late is an approval that may not arrive.

What the provider is looking at

The recurring points of difficulty are title, valuation and exit. The provider will want to see that the scheme's interest is properly documented and separately identifiable, that the asset can be valued by a qualified valuer on a recurring basis, and that some route to disposal exists even if it is slow.

It is worth being straightforward about the last of those. There is generally no established secondary market for shares in individual commercial buildings. A holding may take a considerable time to place and may realise less than was paid for it. Providers know this, and a member who acknowledges it tends to get further than one who does not.

Providers do accept these holdings

Refusal is common and it is not universal. Stakes in Helmsley Group's own syndicated properties are currently held by the trustees of SSAS arrangements and by SIPPs administered by more than one established provider, several of them for decades.

We record it because the question we are most often asked is whether anybody accepts these at all. Policies differ between providers, they change, and the only reliable answer is the one obtained from your own provider in writing. A refusal from one scheme says nothing about the next.

Sources

Rules on what a registered pension scheme may hold, and the connected party requirements – HMRC Pensions Tax Manual PTM125000 and PTM125200. Borrowing – PTM124000.

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.