SIPP and commercial property with flood risk
SIPP and commercial property with flood risk
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Discussion

orbit123

Original Poster:

304 posts

222 months

Wednesday 28th November 2018
quotequote all
Not sure if this or Business is best place to ask.

Has anyone any experience of buying a flood risk property using a SIPP? My actual plan would be to knock building down and build something flood resistant. It sounds like the SIPP might not want to buy something that could be at risk though. The SIPP people have suggested we might need an Environmental Screening Report (ESR) completed for it.
In my case I'm almost looking at the land itself (which is at risk of some flooding every 10 years or so). I'm happy with risk as it would fit my purpose.

I'm finding out more but wonder if something others might have experience of?

ellroy

7,835 posts

255 months

Wednesday 28th November 2018
quotequote all
There are SIPPs and then there are SIPPs.

I had one years ago where trying to get a commercial premises inside one was very problematic, it was a garden centre and the issue was down to the amount of glass and hence the one size fits all insurance that the master trusts tend to use. It may well be possible, but you'll meed to pay someone to do the digging to find one that will accept what you're trying to do. Even then there may be no guarantee. of success.

PurpleMoonlight

22,362 posts

187 months

Wednesday 28th November 2018
quotequote all
SIPP's are getting less 'self invested' by the day.

Are you a Ltd, could you do it via a SSAS instead?

orbit123

Original Poster:

304 posts

222 months

Wednesday 28th November 2018
quotequote all
Thanks. I have a SIPP with a few commercial properties inside already and cash which I was going to use for this purchase. I'm less familiar with SSAS - presume another set of setup costs. The property in mind is around £150k (basically the land).

PistonBroker

2,719 posts

256 months

Wednesday 28th November 2018
quotequote all
ellroy said:
. . . the one size fits all insurance that the master trusts tend to use.
Though as you're not obliged to use their insurance, I guess it's more about how the flood risk affects the value of the asset?

orbit123

Original Poster:

304 posts

222 months

Wednesday 28th November 2018
quotequote all
I'm thinking flood risk affects value of building currently on it - but shouldn't really affect my proposed plan.

PistonBroker

2,719 posts

256 months

Wednesday 28th November 2018
quotequote all
orbit123 said:
I'm thinking flood risk affects value of building currently on it - but shouldn't really affect my proposed plan.
Understood.

Is there an option to buy, do what you want to do, and then transfer it into the SIPP later?

If flood risk is what puts them off now, but your new building eliminates that, then might they look at it more favourably down the line?

orbit123

Original Poster:

304 posts

222 months

Wednesday 28th November 2018
quotequote all
I think that is a decent idea, thanks. I have personal funds I could use but would work better tax-wise within SIPP - so feel property worth a lot less to me if I need to do it personally as its going to cost me more. Vendor hanging out for more. It might be a matter of waiting that out though.

I get impression getting a commercial mortgage for it also difficult for similar reasons so really down to only buyers with cash who are also prepared to build something flood resistant.