Buying your business premises through a pension

The basic shape is straightforward, even if the detail needs specialists. A self-invested pension scheme, set up and run through an appropriate provider, buys the commercial property your business operates from. The pension becomes the legal owner. Your business becomes the tenant and pays rent under a formal lease at a market rate.

Two features tend to attract owners to this idea:

• The rent your business pays goes into your own pension fund rather than to an unconnected landlord.
• The property sits inside a tax-privileged pension wrapper, which can have attractions over the longer term.

Whether any of that is suitable for you depends entirely on your circumstances, your existing pension arrangements and your plans for the business. That is a conversation for a qualified pension specialist, not for us. Our part begins when the scheme needs to borrow to help fund the purchase.

Two types of scheme come up most often when a business buys its own premises:

• A SSAS, or small self-administered scheme, is usually set up by a company for its directors and can pool several members' pots. It is often chosen where family members or fellow directors want to buy a property together through the business.
• A SIPP, or self-invested personal pension, is an individual arrangement. Some SIPPs allow commercial property to be held directly, and in some cases individual SIPPs can be combined to fund a single purchase.

Each has its own rules, costs and administrative demands, and the right choice is specific to you. A pension specialist will confirm which vehicle fits, what it can and cannot hold, and how any purchase must be structured. We do not advise on that choice. We simply make sure the borrowing works alongside whichever route your specialist recommends.

Where a pension owns the premises, the arrangement has to be run properly and at arm's length. That means a written lease between the pension scheme, as landlord, and your business, as tenant, on commercial terms. The rent must be set at a market level, and it has to be paid like any other rent.

The appeal for many owners is that this rent lands in their own pension rather than leaving the business for good. Over time that can build the value of the fund. The trade-off is discipline: the rent is a genuine obligation, the lease has to be honoured, and the scheme has ongoing running costs. Your pension specialist and scheme provider will set the terms and keep the arrangement compliant. We mention it here only so you understand the full picture before you speak to them.

A pension scheme does not always have to fund the whole purchase from cash it already holds. It can borrow to help complete, and this is the part we can help arrange. A commonly cited limit is that a scheme can borrow up to around 50% of its net asset value toward a property purchase, though the exact figure that applies to your scheme is a matter for your pension specialist to confirm.

In practice that means the deposit comes from the pension's own funds and the balance is topped up with borrowing secured on the property. We approach lenders on our panel who lend to pension schemes for this purpose, present your case, and help you compare terms. All figures are indicative and subject to status, the scheme's assets, and valuation of the property.

We cannot stress this enough: a purchase like this needs a qualified pension specialist and an appropriate scheme provider from the start. They are the people who confirm whether the strategy suits you, establish or review the scheme, handle the trustee and administration duties, check that the property is an allowable investment, and keep everything within pension rules.

If you do not already have a specialist, we can introduce you to appropriately qualified firms. We work alongside them rather than in place of them. Getting the pension structure right first, with proper advice, protects you and makes the borrowing far more straightforward when it is our turn to help.

To keep our role plain, here is where we fit:

• What we do: explain the borrowing options in general terms, introduce you to appropriately qualified pension specialists, approach lenders on our panel who fund pension property purchases, present your case, and help you compare and arrange any borrowing the scheme needs.
• What we do not do: give pension advice, give tax advice, recommend a SSAS or SIPP, set up or administer schemes, or tell you whether buying premises through a pension is right for you.

We are Lenzie Consulting Ltd, a finance arranger and introducer, not a lender and not a pension adviser. Lending to companies is generally outside the FCA perimeter; where a case is a regulated mortgage contract or involves an individual, we refer it to an appropriately authorised firm. Nothing here is financial, tax, legal or pension advice.