Read the latest Taylor Patterson company news, or news relating to bespoke pension arrangements .
Following on from our property purchase frequently asked questions we look into the issues clients will be facing surrounding the use of a Taylor Patterson SIPP & SSAS pension product to purchase property and how the management of this property affects them.
A professional property agent can manage the property held in the pension fund; or the member trustee(s) can act as their own manager. Should the member trustee choose to manage the property(s) and wishes to be remunerated we suggest obtaining two quotations from property managers to ensure the fees charged are in line with the industry standard and cannot be disputed.
Neither the corporate trustee nor scheme administrator will act as property manager.
Fees relating to the management of the property can be paid from the scheme fund, as can other administration costs, e.g. surveyors fees, property administrators fees, legal costs and disbursements.
To protect the trustee’s position as landlord, the property should be leased to ensure the scheme is receiving an income from the property. The rent payable and the terms of the lease must be assessed by a Chartered Surveyor, when the tenant is deemed connected to the scheme trustee(s) (i.e. the landlord).
The rent must be paid directly into the scheme bank accounts. Her Majesty’s Revenue and Customs insist that the rent is received promptly, and that the scheme administrator ensures this happens. The trustees should normally enforce the lease, even more so when the tenant is connected to the trustee(s).
Where the landlord and the tenant are connected and the rent isn’t paid in accordance with the terms of the lease, the trustees as landlord (or the appointed property manager) need to make enquiries with the tenant in order to assess the reason(s) why the rent is in arrears. A commercial agreement should be made, but failure to do so could trigger an unauthorised payment. Such payments will attract penal tax charges.
For further details or more information on the matters in this article please contact Jeremy Hunt, SIPP & SSAS Property Manager on 01772 550781 or Jeremy.Hunt@taypat.co.uk.