Investing in commercial property

Prior to purchasing an acceptable property investment an independent valuation is required and must be provided by a RICS Surveyor and addressed to the Trustees of the Scheme.

It is possible to borrow up to 50% of the net value of the assets held within the pension scheme. You are able to borrow from most high street lenders, although all borrowing documentation must be agreed by us prior to a loan being taken out.

Adequate insurance cover through our Block Policy is preferable and must include owners liability insurance of at least £5m.

Rent must be paid when it falls due and subject to regular rent reviews.

Solicitors will be instructed to act for the Trustees to review and report on the Title and carry out any necessary due diligence. We have a panel of solicitors for you to choose from, you can find their details here.

We do not provide property management services. However, it is the responsibility of the pension members to put appropriate property management arrangements in place or the responsibility for property management will fall to the pension members themselves.

• Taxable property including residential (dwelling houses), holiday apartments, beach huts, and caravans.
• Residential Institutions
• Secure Residential Institutions
• Property that benefits from an aggregated income such as hotel rooms and storage pods.
• Types of property where we are advised that there is no re-sale market, or we foresee management difficulties
• Properties with existing tenants with known historic rent arrears or other material breaches of covenant.
• Any property where insurance is unavailable or inadequate in the insurance market for any reason, e.g. combustible composite panels, waste transfer and recycling sites, historic flooding, subsidence.
• Land purchased from a third party which adjoins a member’s personal residence where the member or connected party may gain a non-relevant benefit,
  e.g. being purchased to preserve a view from their house or to stop someone else building, or to increase the value of their personal residence.
• Properties at auction.
• Properties with known unremediated environmental issues.
• Freehold properties where part of the building comprises long leasehold residential properties even if let to third parties with nominal ground rent.
• Land for residential development, garden land, etc.
• Cert ain other residential institutions, e.g. student accommodation, care homes, etc.

The owner of a commercial building who sells or lets it, (or markets it for either purpose) must by law obtain an EPC and make it available to prospective purchasers or tenants at the earliest opportunity. When a property is being purchased or transferred (including in-specie) we will require an EPC to be produced before the transaction can complete.

Asbestos may be an issue with properties built before 2000 and we will ask the Trustees’ solicitor to investigate as part of our instructions. If there is evidence supplied that the property contains asbestos it will be necessary to put an Asbestos Management Plan in force if there is no existing one.

Investing in commercial property can be complex and time consuming. Our aim for each transaction is to make the process as straightforward and efficient as possible, and we take over the end to end process and deal with all parties so that you don’t have to.

We prefer to work with our panel solicitors who have extensive knowledge of transactions within pensions and know the way we and HMRC work. We have pre-agreed reports and lease documentation in place to simplify the conveyancing process and have negotiated a schedule of fees for each type of transaction. You may still use a solicitor of your choice but this involves more work for us and we reserve the right to charge higher fees.

We will review any proposals to establish whether they are pension compliant and where possible, to avoid incurring unnecessary fees if a transaction cannot go ahead.

Commercial property can be a less liquid investment and disposal of it will take longer than exchange traded investments. You should take this into account when considering a property investment and the need for liquid assets to pay retirement benefits as and when they fall due or additionally, during times when a property is unlet as insurance and business rates will still be payable.