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Investing in commercial property

Buying commercial property via a pension scheme can be a tax-efficient way to inject cash into a business and provide regular income in the form of rent. Those planning to purchase property through their pension, should consider the following:

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

It is possible to borrow up to 50% of the net value of the assets held within the pension scheme.

Adequate insurance cover through our Block Policy is mandatory and held in the name of the Trustees , including property owners liability insurance of at least £5m.

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

Wherever possible any borrowing should be through an authorised lender, these being the high street banks.

Embark Pensions will consider the use of new lenders, or lenders that we have not dealt with previously, however, Embark will not allow its pension schemes to borrow from finance type companies. The work involved in dealing with this type of lender is excessive and the terms on offer typically do not match those offered by a high street lender.  Experience shows these tend to be the only available option where a proposed connected tenant has a weak covenant and in turn potentially leads to rental debt issues in the future.

Embark Pensions will allow its schemes to borrow from a connected party. This would be to cover short term liquidity issues and not for long term investment.  The above criteria should be met as well as the following specific criteria. Embark will allow connected borrowing provided it is done on an arms length basis for an unsecured loan. Any loan should be less than 1 year, with no security, no ability for the lender to request early repayment but that allows the borrower to repay early.

We offer a panel of solicitors that can be used for carrying out property transactions. We have strong working relationships with these partners and as a result we are able to complete the transaction at a lower fee than if a non-panel solicitor was used.

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 real management difficulties.
  • 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.
  • Properties with existing tenants with known historic rent arrears or other material breaches.
  • 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.
  • Certain other residential institutions, e.g. student accommodation, care homes, etc.

We know property

Our dedicated property team are well versed in the intricacies of holding property within a scheme. They oversee a property portfolio of c6,000 UK and overseas properties.

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