Pensions & Property
Eileen,
Here goes bursting your bubble.
The new legislation introduced in 2004 FA allows occupational pension schemes to borrow as part of their investment strategy, for example to buy a property.
However, this facility is not available to Personal Pensions for self employed. If you want to buy a property(such as your practice property) you could do so via a Pension Mortgage, i.e.:
- you borrow the funds personally on an "interest only" basis i.e. you make no capital repayments
- you buy the property in your own name
- you set up a conventional Personal Pension Plan with the objective of paying off the borrowing in one bullet out of the pension fund when you retire.
Setting up such a structure will require advice re the level of pension contributions, how big your fund will need to be to repay the loan etc, etc.
Another property alternative is to invest into a property syndicate (typically a share in a commercial property). A number of these are on the market currently. Alternatively you could also invest through a syndicate structure into an apartment investment. Again a number of these are currently on the market.
If you are serious about pursuing a pension/property investment I would suggest you get good advice. I would caution about the apartment syndicates (most seem very expensive, offer poor rental yields etc). Some such promoters seem more interested in selling the apartments that offering pension planning advice.
Just because there is tax relief, it will not transform an otherwise poor investment into a good investment. So look at the property carefully (would you buy it if there was no tax relief?), consider the market prospect (are apartments now oversold?).....
No substitute for good advice.