Buying land with your pension

[Frankychops]

the children have riding lessons, the owners are looking to sell the land, stables, 10acres.

No housing on site, direct road access. Also has a few glamping pitches. Not near my house.

We’ve been offered it for £250k.

No I can’t afford to buy it any normal way, however I think I could buy it by using an element of my pension? I’ve a large enough pot to cover the purchase and any fees.

Anyone done similar? Am I correct in thinking you can do this? How much of a process is it?

[Rufus Stone]

Done lots, as a product provider and trustee.

Are you using a SIPP or SSAS?

You will need to ensure it's commercial/agricultural land, not part of someone's garden. Sounds okay from what you have said.

The pension arrangement may not permit the glamping pods. Many deem them tangible movable property. May have to purchase them personally.

You need to watch trading in the pension arrangement. Livery could be deemed trading, and the glamping pods certainly would if permitted. Usually any land/buildings would be let to someone to use instead, this can be you but would need to be at commercial rate.

Purchase is no real difference to any other property purchase. Many pension providers want every report under the sun though.

The pension provider will have their own charges for the purchase, and may dictate the solicitor.

[Frankychops]

Rufus Stone said:

Done lots, as a product provider and trustee.

Are you using a SIPP or SSAS?

You will need to ensure it's commercial/agricultural land, not part of someone's garden. Sounds okay from what you have said.

The pension arrangement may not permit the glamping pods. Many deem them tangible movable property. May have to purchase them personally.

You need to watch trading in the pension arrangement. Livery could be deemed trading, and the glamping pods certainly would if permitted. Usually any land/buildings would be let to someone to use instead, this can be you but would need to be at commercial rate.

Purchase is no real difference to any other property purchase. Many pension providers want every report under the sun though.

The pension provider will have their own charges for the purchase, and may dictate the solicitor.

There's not any glamping pods on it currently, they were removed a few years ago(just still has permission etc). my pension is currently in an interactive investor SIPP

[alscar]

Are you asking purely from the pension aspect or from the point of buying ponies for the kids and having as both a quasi “ investment “ and then running a private yard ?
If just the former and a private pot it’s your money so would be subject to your providers own t and c etc ie there may be a charge on say withdrawals above a certain annual drawdown quantum.

[alscar]

Pressed send too quickly.
Meant to add the funding may be less painful than the running of the private yard and land.

[Rufus Stone]

Frankychops said:

There's not any glamping pods on it currently, they were removed a few years ago(just still has permission etc). my pension is currently in an interactive investor SIPP

The ii SIPP doesn't appear to facilitate property purchase. You would need to establish one with a provider that does, and transfer funds from the ii SIPP.

[alscar]

Given it’s a SIPP you could potentially purchase but only if you were intending to run as a livery business which then qualifies ?
However not sure especially if novices this is something that should be undertaken lightly !

[Frankychops]

alscar said:

Are you asking purely from the pension aspect or from the point of buying ponies for the kids and having as both a quasi investment and then running a private yard ?
If just the former and a private pot it s your money so would be subject to your providers own t and c etc ie there may be a charge on say withdrawals above a certain annual drawdown quantum.

bit of both. Long term investment, the mrs could run it as a yard.

As I understand it from what i've read, you can just by land and rent it to a farmer etc?

[alscar]

Not sure whether just renting the land would qualify as running a commercial business but I’m no expert.
Investment potential is obviously there with direct access but depends on so many criteria as to whether pp would ever be granted.
Equally you are paying £25k an acre which might end up just being for your kids ponies and / or running a livery and all that entails.
How far / drive time is the site from your place ?

[Frankychops]

alscar said:

Not sure whether just renting the land would qualify as running a commercial business but I m no expert.
Investment potential is obviously there with direct access but depends on so many criteria as to whether pp would ever be granted.
Equally you are paying £25k an acre which might end up just being for your kids ponies and / or running a livery and all that entails.
How far / drive time is the site from your place ?

15 min drive.

Its early days, so we might get it cheaper etc etc.

where it is, it'll always have value, so if it was taking £250k out of my pension now(well ahead of retirement age), we could get some instant tangible benefit from our pension savings, thats got a massive personal value.

[alscar]

Frankychops said:

15 min drive.

Its early days, so we might get it cheaper etc etc.

where it is, it'll always have value, so if it was taking £250k out of my pension now(well ahead of retirement age), we could get some instant tangible benefit from our pension savings, thats got a massive personal value.

Indeed - they aren’t making new land.
My wife is lucky in that we were able to buy extra land attached to our existing and also then build a stable yard for her 3 horses.
Bl£&dy expensive pets these days as all retired.

[mikef]

Frankychops said:

the mrs could run it as a yard

If that s the plan, then maybe check that the seller already has pp for non-agricultural use. Lots of small stables, especially if attached to the owners property don t have that, meaning technically you could shelter your own ponies, but not run a livery yard

Edited by mikef on Saturday 22 November 15:40

[Frankychops]

the current owners have permission and on companies house the business owners have it as "xxxxxxxx EQUESTRIAN CENTRE AND GLAMPING LTD"

[mikef]

Good stuff, always worth a check

[Frankychops]

I can't see why not to? you can fold all fees so they come from your pension?

seems a short cut to get value now, 15 years ahead of being able to take cash? whats the catch?

how does it work with value of pensions with the 25% tax free? or does it stand as an investment so basically like cash that you're not taking out till sold etc?

[Caddyshack]

Frankychops said:

I can't see why not to? you can fold all fees so they come from your pension?

seems a short cut to get value now, 15 years ahead of being able to take cash? whats the catch?

how does it work with value of pensions with the 25% tax free? or does it stand as an investment so basically like cash that you're not taking out till sold etc?

Yes, it’s not taking money out (re 25%) the pension is investing in something other than equities.

[Frankychops]

Caddyshack said:

Frankychops said:

I can't see why not to? you can fold all fees so they come from your pension?

seems a short cut to get value now, 15 years ahead of being able to take cash? whats the catch?

how does it work with value of pensions with the 25% tax free? or does it stand as an investment so basically like cash that you're not taking out till sold etc?

Yes, it s not taking money out (re 25%) the pension is investing in something other than equities.

which just adds to the value really?

[Caddyshack]

Frankychops said:

Caddyshack said:

Frankychops said:

I can't see why not to? you can fold all fees so they come from your pension?

seems a short cut to get value now, 15 years ahead of being able to take cash? whats the catch?

how does it work with value of pensions with the 25% tax free? or does it stand as an investment so basically like cash that you're not taking out till sold etc?

Yes, it s not taking money out (re 25%) the pension is investing in something other than equities.

which just adds to the value really?

In theory, it might, yes. There is a gamble…will the land go up in value as much as the equities it no longer holds? They will pay rent normally to the pension for the use of the land which can be very tax advantaged.

I imagine the land might not rise as much in value but the rent going in will be more than the dividends from
The equities.

[clio007]

How does it work in reality if you buy land with your pension

How does the rent physically go back into your pension? Do you get the rent and then pay it into your pension?

Or does the pension provider manage it all (for a fee?))

[Frankychops]

Caddyshack said:

In theory, it might, yes. There is a gamble will the land go up in value as much as the equities it no longer holds? They will pay rent normally to the pension for the use of the land which can be very tax advantaged.

I imagine the land might not rise as much in value but the rent going in will be more than the dividends from
The equities.

I almost don't care if the land doesn't go up at all. its a way of getting value today from my pension, it won't really drop so there's some protection with the diversification? I'm hoping to see how much its generating from stabling, If its £10k pa after costs etc, i'd take that 4% as it could have other net income savings for me