SIPP Property Finance
The Complete UK Guide

A Self-Invested Personal Pension (SIPP) is a type of personal pension that gives you control over how your pension fund is invested. Unlike standard personal pensions where the provider chooses the investments, a SIPP allows you to choose from a wider range of assets — including commercial property.

When a SIPP purchases commercial property, the property becomes an asset of the pension fund. The SIPP trustee holds legal title to the property, and any rental income or capital gains flow back into the pension fund, growing tax-free until you begin drawing your pension.

This creates a powerful tax-planning opportunity for business owners in particular: your company can rent its commercial premises from your SIPP, turning what was a business expense into a pension contribution. The rent is tax-deductible for the business and tax-free within the SIPP.

Under current HMRC rules, a SIPP can borrow up to 50% of the net value of the scheme's assets at the time of borrowing. This borrowing can only be used for the purpose of acquiring an asset — typically commercial property.

For example, if your SIPP holds £500,000 in investments, you could borrow up to £250,000, giving you a combined purchasing power of £750,000 for commercial property.

The loan must be from a bona fide third-party lender (not from you or a connected party), and the property itself usually serves as security for the loan. Interest rates and terms are negotiated with the lender, with typical terms ranging from 5 to 25 years.

One of the key benefits of SIPP property ownership is the ability for a connected party — such as your own business — to lease the property from the SIPP. This is specifically permitted under HMRC rules, provided the transaction is conducted at arm's length (i.e., at market value).

The rent must be set at a market rate, typically supported by an independent surveyor's valuation. The rent should be reviewed regularly (usually every 3-5 years) to ensure it remains at market level.