Can a SIPP buy land?

You have a simple question: can a self-invested personal pension (SIPP) buy land? Well, the short answer is yes – depending on your SIPP provider. Here’s what you need to know.

Can a SIPP buy land?

In a word, yes. A SIPP can buy land.

It’s common for investors to use a SIPP to fund a commercial property purchase. And it’s not hard to see why. It releases capital, it’s tax efficient and – if you are purchasing your own commercial premises – it can offer a lot of business security.

But while there’s a good reason that bricks and mortar investments remain popular, the old adage about land is a salient one in terms of market economics. Land: they don’t make it anymore, therefore supply and demand tends to dictate that values increase steadily over time. Of course, there is also the possibility of obtaining planning permission on the land, or buying land with planning permission to then develop, thus increasing the value that way.

If you are keen to explore the possibility of buying land yourself, the good news is that you should be able to do so within your pension – depending on your provider. In most cases you will also be able to borrow up to 50% of the value of your pension to help fund the purchase, and/or to pay for the costs of developing it.

What sort of land can you buy with a SIPP?

You can acquire many different types of land within your SIPP. You can acquire land for development, or to simply buy and hold. Pensions have also been used to purchase more exotic pieces of land, such as access roads to quarries, the land to develop sports stadia and the land for a clay pigeon shooting site.

Whatever your ambitions, you can expect your SIPP provider to scrutinise the financial viability of your investment. They will also help you ensure that the land is allowable under pension legislation, and check that any development plans meet the rules. They will also most likely ask you to instruct an independent expert to value the land and ensure it’s acquired at market value. This is not a case of needless red tape. It’s about bringing more security and tax compliance to your investment and helping to protect your pension from unnecessary risk.

Planning permission and land development

If you intend to develop the land you purchase within your SIPP, you will have to obtain planning permission – a process which can be expensive – or buy land with planning permission already in place. The good news is that the planning process can be paid for by your pension.

If you develop the land, your SIPP provider may require the work to be completed by a single contractor – one that is totally independent from you as an investor. You will also need to obtain a minimum of two quotes for the proposed works. Again, it’s all about protecting the integrity of your SIPP fund.

What about residential development?

You are entitled to purchase land with the intention of obtaining planning permission for residential development. The catch is that you will need to sell the land before development work Is completed, to ensure that it doesn’t breach pension scheme rules on holding residential property.

What next?

Buying and developing land is an exciting project. But it’s important to remember that the main function of your SIPP is to provide financial security for your retirement. That’s why it’s worth working with an adviser who understands land investments, can assist you with the initial transaction, and of course in dealing with the SIPP provider

We can help you find the most appropriate SIPP provider for your requirements. As an independent financial adviser specialising in wealth management, we have access to the entire SIPP market and can help you identify the providers that are best placed to facilitate the purchase and holding of land in your pension. And if that requires switching from your existing pension provider, we can assist you with that decision as well.

Call us to discuss your ideas. An initial consultation with one of our experts is completely free.


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