How commercial property purchases are structured within a SSAS

When people think about buying commercial property through a SSAS, they often picture a fairly conventional property purchase with a pension scheme replacing the individual buyer. In reality, the transaction is usually much more collaborative than that. Although the purchase itself may appear straightforward, a successful SSAS property acquisition often depends on several professionals working together from the outset, each looking at the transaction through a different lens.

One of the biggest misconceptions we come across is that everything needs to happen one step at a time. In practice, many parts of the transaction can progress in parallel. While pension transfers or employer contributions are being arranged to fund the scheme, solicitors can be instructed, surveyors can begin valuations where they are required, accountants can advise on VAT and tax considerations, and conversations with lenders can start if borrowing is likely to form part of the purchase. Running those workstreams together usually makes for a far smoother transaction than waiting for each stage to complete before beginning the next.

Our role sits alongside those advisers rather than replacing them. Solicitors deal with the legal transfer of the property. Surveyors establish market values and rental assessments where appropriate. Accountants advise on tax, VAT and wider business implications. Financial advisers continue supporting the client’s overall planning. We focus on ensuring that the transaction remains compliant with the pension legislation and that the trustees are making decisions in the best interests of the scheme. Although everyone is contributing to the same purchase, each professional is solving a different part of the overall problem.

That collaborative approach also gives clients considerable flexibility over who they choose to work with. We are often asked whether a SSAS requires panel solicitors or prescribed professional advisers. It doesn’t. We are perfectly happy working alongside solicitors, accountants, surveyors and lenders that clients already know and trust. The important consideration is not who they are, but whether they understand the additional responsibilities that come with acting on a pension transaction. Commercial property specialists may only encounter a handful of SSAS purchases during their careers, and the pension framework can introduce considerations that simply do not arise in conventional transactions.

One of the areas where those additional considerations become most obvious is when a property is being acquired from a connected party. Purchasing from the sponsoring employer or one of the members is perfectly possible, but the transaction must demonstrate that it has been carried out on fully commercial, arm’s length terms. That is why independent RICS valuations, properly documented leases and market rental assessments become such important parts of the process. They are not simply administrative requirements. They provide evidence that the trustees have acted appropriately and help protect the scheme if those decisions are ever questioned later.

Borrowing introduces another layer of complexity. Many advisers are familiar with the headline rule that a SSAS may borrow up to 50% of its net asset value, but that figure is only the starting point. The source of the borrowing, the security being offered and the relationship between the pension scheme, the business and any lender can all influence whether a proposal is workable. We regularly find ourselves involved in conversations where the commercial objective is entirely achievable, but the proposed structure needs to change slightly before it fits within the pension legislation. Those adjustments are often relatively small, but identifying them early can prevent much larger issues developing later in the transaction.

That is probably why we encourage advisers to involve us as early as possible. We rarely find ourselves telling somebody that their objective cannot be achieved. More often, we are helping them understand how the same commercial outcome can be reached in a slightly different way. Sometimes that involves restructuring ownership. Sometimes it means approaching borrowing differently. Sometimes it simply means asking questions at the beginning of the transaction that would otherwise have emerged much later.

Looking back across the transactions we have worked on, the purchases that progress most smoothly are rarely those with the simplest properties. They are usually the ones where everyone involved understands their role, communicates openly and approaches the transaction as a collaborative project rather than a sequence of isolated tasks. Commercial property purchases through a SSAS are undoubtedly specialist transactions, but they do not have to be complicated when the right people are involved at the right time.