Buying Land with Pension

[AsleepInYorkshire]

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

[ReformedCharacter]

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

[Alaric]

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.

[AsleepInYorkshire]

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

1. Buying the land through a SIPP - is it known as a Red Book Valuation?
2. Buying the house with cash/mortgage?

Thank you

CiY
CheekyInYorkshire

[AsleepInYorkshire]

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

[Mike4]

So if I have a full service SIPP I could [potentially] fund the purchase of an old house by

1. Buying the land through a SIPP - is it known as a Red Book Valuation?
2. Buying the house with cash/mortgage?

Thank you

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.

[UncleEbenezer]

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.