10 reasons we’re ideal for clients looking to hold commercial property in their pension

There are many well-run bespoke SIPP providers in the space where IPM operates. One of the things we have in common with many of our competitors is that clients can buy commercial property as an investment option within our SIPP.

However, some well-known companies that offer a SIPP, including AJ Bell and Hargreaves Lansdown, do not have commercial property as an option.

So, when a client approaches you to make this type of investment, you will need to look towards the bespoke end of the market to accommodate this requirement.

As an area of strength for IPM, you will often read about commercial property in our content. Indeed, you may have recently read the recent guest article by our panel solicitors Matthew Waite & Co. discussing some of the legal areas to consider with SIPP property purchase.

Additionally, you have also read:

We regularly say that commercial property is an area of strength for IPM. But why do we believe this is the case? Here are 10 reasons.

1. Our team

Like many things, the SIPP market is increasingly moving online. IPM is no exception, and we are focusing on enhancing our online functionality to support the service we already provide.

However, when it comes to commercial property transactions, we don’t believe this is something that can be dealt with online. Often, various moving parts to a transaction require people to speak to people. And we are very proud to have built a great property team at IPM.

Our property team comprise more than a third of our employees, many of who have more than 15 years of experience in SIPP property transactions. More of the team have been with IPM for a decade (and some over two decades) than have not!

All this means that there are very few scenarios that they have not faced in their time working in SIPPs. This can be invaluable when it comes to property transactions, where matters crop up (often at the last minute!) that need dealing with.

Also, we are happy to support our advisers who may receive a SIPP property purchase enquiry. We are used to chatting through clients’ scenarios and helping advisers put their advice together so they can go back to their clients fully informed, even where this advice may be that the transaction may not work on this occasion.

2. A member of our team allocated to each purchase

Following on from the above, no two property transactions are the same. There are so many variables to get a deal over the line that you need people with knowledge of the transaction who can respond and deal with matters promptly.

This is why IPM allocates a member of our property team to each purchase. This individual is your point of contact from instruction through to completion and beyond, although as you continue working with IPM other members of our property will step in at times to assist with specific tasks.

You can get in touch with your point of contact by phone and email. And, at IPM, we do not operate an automated telephone answering service – your call is answered by one of our colleagues who will assist you.

3. One of the most cost-effective offerings in the market

Cheap is not always cheerful. And we have certainly not designed our charging structure for property purchase with this in mind. However, we do believe in fairness and transparency. This, in turn, has led IPM to have one of the most cost-effective SIPP property offerings in the market.

This is mainly down to the fact that we do not charge many of the annual property fees that a number of our competitors do:

No annual property fee
No annual borrowing fee
No annual group SIPP fee.

These are all covered by the annual administration fee your clients already pay to IPM.

There is an annual charge for properties that are VAT-registered to cover the quarterly VAT returns IPM complete, as well as further one-off charges when certain actions occur, such as our property purchase fee. You can find more information about these on our website.

4. We take an open approach to all proposed purchases

IPM’s criteria for a property transaction is that we will look at any freehold or leasehold commercial property in the UK.

For our advisers, this means that SIPP property purchase is a subject you can discuss with all your entrepreneurial clients. IPM is happy to support you with building the advice by looking at specific scenarios, discussing how this would work in practice and pointing out areas that you need to be aware of.

Here are some examples of common property types that we hold on behalf of clients and some of the more unique transactions we have worked on.

5. We are not afraid to say “no”

With the above said, we’re also not afraid to say “no” to any particular transaction or request for an existing property we hold.

At all times, in our role as trustee, IPM’s first duty of care is to the SIPP. We will of course do what we can to accommodate a client’s request, but not at the risk to the pension scheme. This could be where a particular request could give rise to a tax charge (in accordance with HMRC) guidelines or administratively we know that this could be a problem in the future.

Where our response is a “no”, we are happy to discuss this with our advisers so they have all the necessary information to go through this with their client.

6. IPM can accommodate group property purchases

One in three of the property transactions we undertake involve more than one SIPP.

It is not uncommon for groups of people to come together to combine their SIPP monies to purchase property. Usually, there is a common link as people are married couples, business partners, or co-directors. Moreover, we are increasingly seeing different generations of families setting up SIPPs for this purpose.

While IPM will create a group arrangement to hold any jointly owned property, we do not levy any additional charges for this, either initially or ongoing.

This allows people to collectively purchase a property, but then have their own individual SIPP to make investment decisions and withdraw benefits away from the remainder of the group.

7. No panel of surveyors to choose from

Our approach is that we try to accommodate any third party that clients wish to work with for their SIPP.

While we operate a panel of solicitors who we prefer to act for IPM on all transactions, we are more relaxed with the choice of surveyor.

To purchase any property within a SIPP, IPM will require a valuation. Providing that a surveyor is chartered by RICS, we are happy for any firm to provide this. Details of the firm can be provided to IPM who will then instruct the surveyor in accordance with HMRC requirements.

8. No panel of banks to choose from where lending is required

Similarly, we are happy for any bank to provide the lending for the SIPP.

Consequently, if our advisers or clients have any existing relationships with banks, this may be a good place to start to negotiate the terms of the loan. Alternatively, a broker can be appointed to source the lending.

We spoke to one such broker last year about his thoughts on the SIPP lending market at the time.

In some instances, IPM can consider connected lending. This is where the client or their business can lend money to the SIPP on commercial terms as opposed to a bank. This is an area advisers should speak to IPM about before proceeding.

9. Clients can appoint themselves as property managers in some circumstances

IPM will require all properties we own to have a property manager appointed to deal with day-to-day matters that may arise with the building.

However, unlike other providers, IPM does not have a panel of property managers that clients must choose from. In fact, in some circumstances, clients can appoint themselves as the property manager.

10. Rental income can be invested in a SIPP alongside property at no additional cost

As we are sure you are aware by now, IPM levies a flat annual administration fee with no additional charges for holding a commercial property or making other investments within the SIPP.

It is not unusual to see a SIPP with IPM hold a commercial property and then have a platform account, DFM account, or other investment solution sitting alongside the SIPP. This can then be used to invest any balance left in the SIPP once the property has been bought, or to invest the rental income.

IPM does not operate panels of investment houses you must select from for your clients.

Get in touch

If you have a client with a commercial property query and would like to find out how IPM can assist, please get in touch. Email info@ipm-pensions.co.uk or call 01438 747151.