Sipp Your Way into Commercial Property Market; Increasing Numbers of Businesses Are Considering Purchasing Their Own Property - but Is It Better to Have It Owned by the Business, Privately or as Part of a Pension Fund? Darren Holdway, a Partner at the Birmingham Office of HW, Chartered Accountants, Looks at How Commercial Property Might Be Purchased

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Byline: Darren Holdway

After 14 years of positive returns, the UK commercial property market went into sharp reverse in the second half of 2007.

The speed of the market decline in the fourth quarter was unprecedented and primarily driven by swings in the demand for property as an investment, rather than the underlying occupier market.

With that in mind, some investors now believe it to be a good time to invest in commercial property in the UK.

In addition to speculative investors, many company owners are considering purchasing a commercial property for use by their business. Indeed, they or their business might already own one.

One aspect that needs to be considered at the outset is the issue of ownership: by the business, the directors/shareholders or in a pension fund.

One thing though is clear: by separating the property from the trade, you are effectively protecting the property in the event of future financial difficulty within the trade.

This is as true whether the property is in private ownership or within a pension fund.

Often the preferred route is through a self-invested personal pension (Sipp) - a type of personal pension which provides the policy holder with greater choice about the investments held.

With a Sipp, it is possible to invest in the shares of any company on the Stock Exchange or in other approved assets.

It's also worth noting that more than one Sipp can own a share in a commercial property, allowing the investors, such as company directors or business partners, to pool pension monies to purchase the property.

Such a route has several benefits.

First, personal contributions to a Sipp will attract tax relief at the individual's marginal rate. …