Syndicated Pension Properties
increasing flexiblity and returns

 
 

Commercial Property Syndicates
Harsant Services has teamed together with other professions; law firms, property acquisition companies, property managers and financial investment houses to offer Commercial Property Syndication as another investment opportunity to our SIPP and SSAS clients.

Commercial property has proved to be a good investment during the past 10 years and is a permitted asset class within a pension. But few investors have sufficient funds in their pension to allow them to purchase a significant property.

Syndicating your investment in property gives you access to larger properties with the potential of better quality tenants.

It may be that you have considered investing part of your pension in commercial property and also wish to invest in different asset classes.

Syndication gives the greatest flexibility to enter the commercial property market.

But what are the advantages of owning commercial property in my pension fund?
Tax relief on all pension contributions (40% for high tax payers, which means you are only paying for 60% of the value of the property)
Currently up to 75% mortgage allowed, assisting in the purchase of the property (50% of the value of the SIPP fund following changes in pension legislation on 6 April 2006)
Costs, such as arrangement fees, mortgage fees and legal work are paid by the pension and therefore benefit from tax relief
No limit on the number of properties which can be purchased
No income tax on rental income received by the pension scheme
No Capital Gains Tax on disposal of the property

How do I start?

The first step is to register your interest by contacting us and establishing a SIPP
The minimum investment in the syndicate is £25,000.
By law the maximum permitted number of investors in a syndicate is 20, however, most syndicates will have between 12 - 15 members.
Harsant will arrange transfer of funds from other pension arrangements into each individual’s SIPP. All Harsant SIPP clients have a bank account with Cater Allen Private Bank and interest is paid on cash deposits.
Pension contributions can be made into your SIPP, the tax relief dependent on individual circumstances and following HMRC rules. Harsant can provide these calculations on request.
Once monies are available in your SIPP the fees will be deducted (Syndicate membership fee, Individual SIPP fees, both establishment and annual administration) and the funds you have instructed for property purchase and associated fees will be transferred to the Syndicate Holding Account within Cater Allen. The fund will continue to attract interest but will be ready to move once a suitable commercial property has been found.
The remaining money in your SIPP will be available for you to invest as you and your financial advisor decide.

Harsant Services hold a list of prospective investors. Due to the speed at which Commercial Properties are snapped up, using the criteria you have established for investment, a suitable property will be purchased on your behalf.

As part of the purchase procedure each member of the syndicate will sign the syndicate deed and rules.

The Risks
As with all investments, there are risks involved and no guarantees that the commercial properties offered to the syndicate will deliver returns on your investment. It is vital that you seek independent advice, research the commercial property market and the properties offered.
Commercial property is not a liquid asset. Planning when to sell your tranche of the syndicate is crucial.
Whilst the properties offered will be have long term leases attached there may be circumstances when the rental income does not cover the borrowing. You must be prepared to meet any shortfall from your SIPP fund. Failure to do so will lead to your holding being offered to other members of the Syndicate. In extreme circumstances if no other investor can be found the property will be sold.
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