I'm vaguely aware that it's possible to buy land with pension funds. I appreciate there's some detail to that.
I think I'm right in saying you can't buy a house though. But can you buy the land a house is stood on through a pension and the use a different source of money for the home itself please?
Thank you
AiY
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Buying Land with Pension
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Direct questions and answers, this room is not for general discussion please
Direct questions and answers, this room is not for general discussion please
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- Lemon Half
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Re: Buying Land with Pension
AsleepInYorkshire wrote:I'm vaguely aware that it's possible to buy land with pension funds. I appreciate there's some detail to that.
I think I'm right in saying you can't buy a house though. But can you buy the land a house is stood on through a pension and the use a different source of money for the home itself please?
Thank you
AiY
This may help:
https://www.onlinemoneyadvisor.co.uk/pensions/sipps/sipp-land/
RC
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- Lemon Half
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Re: Buying Land with Pension
ReformedCharacter wrote:This may help:
https://www.onlinemoneyadvisor.co.uk/pensions/sipps/sipp-land/
which implies you can only buy "commercial" property and land.
However, while you can buy land with your SIPP, or use your SIPP savings to borrow against to purchase or invest in land, it’s important that any land you buy isn’t for residential use and if possible, that it has some commercial link and can earn an income.
Be aware also that you need a SIPP that supports such investment options. They are usually more expensive. It's not unknown for the directors of a Company to set up a SIPP or its corporate equivalent a Small Self Administered Scheme (SSAS) to own the Company's premises.
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Re: Buying Land with Pension
ReallyVeryFoolish wrote:AsleepInYorkshire wrote:I'm vaguely aware that it's possible to buy land with pension funds. I appreciate there's some detail to that.
I think I'm right in saying you can't buy a house though. But can you buy the land a house is stood on through a pension and the use a different source of money for the home itself please?
Thank you
AiY
Yes, but not with a SIPP that's invested through one of the typical low cost retail investment platforms. A full service SIPP is required to do this.
RVF
Thanks RVF,
Can I just interrogate you a little further please
So if I have a full service SIPP I could [potentially] fund the purchase of an old house by
- Buying the land through a SIPP - is it known as a Red Book Valuation?
- Buying the house with cash/mortgage?
CiY
CheekyInYorkshire
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Re: Buying Land with Pension
ReallyVeryFoolish wrote:Any residential connection means a SIPP cannot invest would be my understanding. If it is a shop or an office or a water tower or a workshop or a car park...... I believe it would be fine. Residential property is certainly not allowed. However, I am but a simple fool so if your situation is more nuanced than "it's a house" or "it's a building plot" then you may need professional help to determine the actual possibilities.
RVF
Many thanks, appreciate your reply greatly, but I still hold the title of Most Simple Fool
Cheers
AiY
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Re: Buying Land with Pension
AsleepInYorkshire wrote:So if I have a full service SIPP I could [potentially] fund the purchase of an old house byThank you
- Buying the land through a SIPP - is it known as a Red Book Valuation?
- Buying the house with cash/mortgage?
CiY
CheekyInYorkshire
One thing it might help to clarify. AIUI you never "buy a house" (assuming freehold), you actually buy the parcel of land, and with it comes anything that happens to be built on it. If your bit of land happens to have a load of bricks stuck together into the shape of a house, you may elect to pay more for said parcel of land than some adjacent parcel of land with no such load of bricks on it.
I suspect the reason for residential land not being allowed in a SIPP is the security of tenure the occupier might possibly have, thereby mucking up its value as an investment.
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Re: Buying Land with Pension
Mike4 wrote:I suspect the reason for residential land not being allowed in a SIPP is the security of tenure the occupier might possibly have, thereby mucking up its value as an investment.
I suspect it's more to do with disallowing house purchases from untaxed money. I looked into that, as it would've enabled me to buy a house maybe ten years earlier than I was able to in practice (with income always too uncertain for a mortgage, I had to wait 'til I could get the 25% lump sum out).
Talking of which, they also don't like people buying without a mortgage. If it happens too often it could tend to undermine the ability to push prices up through money-printing.
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