Posted August 17, 2020

Commercial Properties and SIPPs: How Does It Work?


At Finance 4 Business, we’ve spent the last few months helping businesses across the country gain access to the finance they desperately needed during the coronavirus pandemic. We have supported our clients from inception to completioncarefully managing their application to support eligibility and sourcing the right lender for their business.

After securing the finance needed to keep your business stable, now is the time to look to the future and get business moving again. As we now face the biggest recession in UK history, you may be wondering about what options you have.

Commercial finance offers the opportunity for business growth by providing the funds necessary to achieve your business goals. This funding may be available through a SIPP – but how does it work?

What is a SIPP?

A SIPP is a self-invested personal pension, and is an exciting way to invest your money into commercial property.

Through your SIPP, you may be able to take out a mortgage to buy a commercial property by borrowing up to 50% of your SIPP’s value. Not only this, but you can also transfer your existing commercial properties into your SIPP, essentially using this asset to make pension contributions in place of a cash lump sum.

Investing in commercial property this way may also be beneficial if you are looking to purchase abroad, as you may be able to gain tax benefits.

What types of property can you invest in?

There is a range of different commercial properties available when using your self-invested personal pension. The property may be connected to your own business, or you may choose to purchase the property to rent it out.

You may also have the option of purchasing land for the purpose of property development. In this case, you would use funds in your pension to borrow money to put towards developing existing premises you had previously purchased through your SIPP.

Talking to an expert

The interest rate you can expect to pay on a SIPP mortgage will depend on your requirements, and will vary between lenders. For this reason, it is important to get advice from a specialist financial broker such as Finance 4 Business, who will be able to source the right products for you.

It is also important that you discuss your needs and finances with an independent financial adviser, so that you can ensure affordability alongside your own financial goals.

Finance 4 Business x KLO Financial Services

If you would like to find out more about SIPPs and commercial properties, we have recently collaborated with independent financial advisers KLO Financial Services on their KLO Talks podcast.

In the podcast, our Senior Business Development Manager Mike Kelly sits down with Terry Michael and Peter Komolafe to discuss commercial properties, SIPPS and SSAS, how COVID 19 has affected the market and why the right advice from a team of wealth management and financial advisers can benefit you.

If you have any questions about using a SIPP to finance commercial property or would like some advice, please call us on 0121 309 0444.