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www.xafinitySIPP.com
The Xafinity commercial property (including land) guide
If you require this document in another format for ease of reading, please let us know.
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Contents
Important notes 3
Property: an overview 4
Property: key points 5
Property purchase: a summary 11
Property leasing: a summary 12
Property sale: a summary 13
Surveyor’s guide: surveys and valuations 14
Environmental risk and concerns 16
SIPP borrowing 18
Leasing the property: rent 20
Developing a property 21
Energy Performance Certificates (EPC) 22
Our property partners 23
Terms and links 30
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Important notes
This document is updated regularly. Check The paperwork we’ll need
you’re referring to the latest document by
downloading it from our website. After reading this guide in full, you need to
complete and return the following forms:
Our products
Purchases / in specie transfers:
This document has been written for The Xafinity “SIPP property purchase
SIPP. If you have a Xafinity Self Invested questionnaire”. Paperwork
Personal Pension Plan (i.e. your policy number is
5 digits starting ‘5’) this document is still correct Leases: “SIPP property leasing
questionnaire”.
in its technical content but there are some minor
differences. In particular, your SIPP is the Sales: “SIPP property sale
Xafinity Self Invested Personal Pension Plan and questionnaire”
it’s not Defaqto rated, whereas The Xafinity SIPP
All the above can be found on our
holds a Defaqto 5 Star Rating. Also, the SIPP
website or from your Xafinity SIPP consultant.
Provider is the Bank of Scotland plc.
When transacting with connected parties, you
Property isn’t an investment option with the
must provide an independent survey and
SimplySIPP. If you have a SimplySIPP and wish
valuation of the property which meets the
to invest in property, please contact us about
standards set out in the survey section of this
moving to the full Xafinity SIPP.
guide at the earliest opportunity.
The terms we use Please ensure you refer to the “Terms and Links”
at the end of this guide to ensure you’re familiar
In this guide we use the following terms: with key terms.
“Us”, “Our” and “We” refer to Xafinity Group No property transaction should be
companies. considered without professional written
financial advice.
“You” and “Your” normally refers to you the
SIPP member.
Legal representation
“Purchase” includes in specie transfer into
the scheme. The SIPP will be represented by your nominated
solicitor.
“Sale” includes in specie transfer out of the
scheme.
“Seller” includes the ceding scheme, in the
case of an in specie transfer into the scheme.
“Property” includes land.
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Property: an overview
Background Our role
Buying, leasing, developing or selling a Our key role is to try and
commercial property using a SIPP can be ensure that any transaction
complex. This guide helps you, your adviser and meets HMRC and other
other parties to undertake a property transaction. regulatory requirements.
When we refer to commercial property in this We’re also here to help co-
guide, we’re also referring to land. ordinate and assist all parties
through the various stages.
All property transactions must satisfy HM However, please note that we
Revenue and Customs (HMRC) and other do not provide property
regulatory requirements, which may vary from management services.
time to time. So that we can meet these
requirements we, and our professional partners, Our fees in relation to property transactions are
have certain requirements as described in this outlined in our Fee Schedule (available on our
guide. website)
We can refuse any proposed property transaction Timescales
where we foresee significant problems or issues
for the SIPP or you (e.g. environmental issues, It will generally take up to three months from the
taxable property). However, only in extreme time the solicitor is formally appointed to
circumstances will we not complete a transaction complete a property transaction using a SIPP.
after an exchange of contracts (or contract Please ensure that the seller/buyer is aware of
acceptance by the seller, in Northern Ireland). the likely timescales.
Things to think about We can complete transactions in shorter
timescales than 3 months but, if there are a
Property is usually a long-term investment. With number of parties involved in these transactions,
this in mind, especially if you’re within ten years co-operation is vital.
of your selected retirement date, you must
seriously think about (and obtain suitable advice)
whether property is a suitable investment. As a
guide, you and your adviser should consider:
when you actually intend to take benefits,
including purchasing an annuity;
whether there will be sufficient liquidity in the
SIPP to provide your intended retirement
option(s);
whether the property may need to be sold to
provide your benefits (e.g. death/retirement
benefits).
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Property: key points
This section outlines the key points to consider supported by an independent open market
when investing in property using a Xafinity SIPP. valuation. If this is not satisfied, an unauthorised
payment charge will be payable to HMRC.
Types
Ownership
A SIPP can be used to purchase freehold or
leasehold property. For a leasehold property, the As the trustee of the SIPP, Xafinity Pension
lease must have at least fifty years remaining, at Trustees Ltd will be the legal owner of the
a nominal ground rent and with no difficult property. This places various responsibilities on
agreements in place. us that we must be satisfied with before we
commit to ownership. With this in mind, although
Beneficial ownership gives the owner the right to it should not be possible, nobody must commit
use the property, or a section of the property, the SIPP to any transaction without our specific
unlike freehold ownership which gives legal title prior written agreement.
to the property. If you’re considering beneficial
ownership please contact us before committing Environmental review
to any transaction.
Environmental matters (e.g. asbestos, property
Property with a residential element is only
contamination) are a major concern. If identified,
acceptable in limited circumstances. You and
your pension fund and/or tenant could incur
your adviser should provide full details of this and
environmental costs that could use up all your
also consider the following HMRC guidance:
pension fund. Any such problems must be
therefore be identified and dealt with before
www.hmrc.gov.uk/manuals/rpsmmanual/RPS
ownership by the SIPP, or dealt with immediately
M07109100.htm and RPSM07109060.htm.
if they are discovered once owned.
Property outside the UK can’t be purchased
under our SIPP, nor can property be Any purchase must have environmental
purchased or sold at auction. clearance from Wilbourn & Co before we will
permit it to proceed. In some cases, this may
The SIPP can’t purchase fixtures or fittings in a involve the need for an Environmental Screening
property, only bricks and mortar are acceptable. Report (ESR) to be carried out. Where this is the
Some land transactions (e.g. agricultural land, case, a fee is payable to Wilbourn & Co for the
woodland) may be acceptable but will need to be site visit and production of the ESR.
reviewed. Please contact us to discuss these.
For all cases, the lease must be prepared to
Connected party transactions show that all maintenance activities, including
those imposed by any legislation (e.g. Control of
A property can be purchased from, leased to, Asbestos Regulations 2012) are the
and/or sold to, a connected person (e.g. you) or a responsibility of the tenant. These
connected company (e.g. your employer). All of responsibilities can’t be held by the Landlord.
these transactions, including the terms of the
lease, must be on an arm’s length basis to satisfy
HMRC legislation. This means the purchase
price, rental amount or sale price must be
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Joint SIPP purchases Property purchase
A property can be purchased on behalf of more Property purchase is £370,800
than one member. Each member’s entitlement (£300,000 purchase cost + 20% VAT + 3%
will depend on the amount their SIPP has paid
Land Tax)
towards the property purchase. A central joint
bank account is established to receive rent
Mrs Smith
payments and pay property related bills, such as
£75,000
a mortgage. Each member’s share, together with
£15,000
actions to take on such events as retirement,
death, disputes and sale are then legally £2,700
Mr Smith Mr Jones
documented under a Joint Ownership £120,000 £105,000
Agreement. An example is shown below. £24,000 £21,000
£4,320 £3,780
Total
purchase
Key price
Red :Net price £370,800
& split
Black : VAT
A joint SIPP example Grey : Stamp
duty
Mr Smith, Mrs Smith and Mr Jones are directors
of Alpha Ltd and are interested in using their VAT
pension funds to buy the company premises, reclaim
which have been independently valued at Mr Smith Mr Jones
£300,000 plus VAT. The independent rental £24,000 £21,000
valuation of the property is £30,000 per annum
plus VAT. Following the purchase, the SIPP
intends to opt for tax with HMRC and lease the Mrs Smith
property back to Alpha Ltd by way of a five year £15,000
lease. The diagram opposite explains the
purchase process based on the following:
Existing Proposed Property
Name SIPP Property Share Rental payments and expenses
Fund Share Value
Overleaf is a diagram which shows how rental
Mr Smith £250,000 40% £120,000 payments and expenses are administered when
Mrs a property is jointly owned.
£150,000 25% £75,000
Smith
Mr
£200,000 35% £105,000
Jones
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Rental payments and expenses Solicitor appointment
Rental is paid by the tenant to a central property We must formally appoint a solicitor to act on
account. Property bills are paid from this account behalf of the SIPP. We prefer to appoint a
and funds regularly moved to the individual client solicitor from our panel (as set out in this guide)
accounts in accordance with their percentage as using a solicitor with SIPP specific knowledge
ownership of the property as shown below: will help considerably. However, if you prefer to
use a different solicitor, we’ll usually agree to this
and we’ll officially appoint them in writing to act
VAT (to on behalf of the SIPP.
HMRC)
£6,000 p.a. For in specie transactions a different solicitor, or
even a different firm, will need to act for the other
Tenant Landlord party. The other party must choose the solicitor.
rental: property
£36,000 p.a. expenses
Surveys and valuations
The property must be surveyed and valued on
Property various events such as purchase, rent review,
account
taking benefits and sale. The valuation should
show the open market valuation and rental
valuation, although the latter is not needed where
the property is being sold. Valuations must be by
Income a member of the Royal Institution of Chartered
payments Surveyors (RICS), and the report should be
Mr Smith Mr Jones produced in accordance with the relevant
40% 35% sections of the RICS appraisal and valuation
£12,000p.a. £10,500p.a. manual at that time and take into account any
environmental requirements they may set.
Mrs Smith
25% Generally, you’ll choose (and appoint) the
£7,500p.a. surveyor, but it may be that either a bank (e.g. for
lending purposes) or we (e.g. to ensure the
appropriate rent is being paid) need to instruct a
surveyor. Any costs associated with this will be
met by your SIPP. The surveyor will be asked to
From the money held in each member’s identify whether there is any asbestos present in
individual SIPP bank account, the members can the property. We’ll also need an Asbestos
invest their funds as they see fit in other Report before completing the property purchase
approvable investments such as quoted shares, for properties built prior to 2000. For those built
unit trusts and trustee investment plans, to after 2000 we’ll need a copy of builder’s
mention just a few. certificate confirming that no asbestos was used
in the construction. For information on Asbestos
Reports see:
http://www.hse.gov.uk/Asbestos/duty.htm
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Stamp Duty, VAT, legal costs the property is transferred to us. The VAT
election must be made to (and accepted by)
and other fees HMRC in advance of the transfer completing. As
this can’t be done retrospectively it’s vital we’re
You and your adviser must ensure there will be
provided with sufficient time to process this.
enough money available in the SIPP bank
account from contributions, transfers and If the property already has tenants who will
borrowing (if required) to pay for all the costs. Be remain in the property, the transfer may be
aware there are annual limits on contributions considered a Transfer of a Going Concern
that you should discuss with your adviser. (TOGC). The following are some of the
conditions and requirements that must be met in
As well as the purchase price, it’s important to
order for a transaction to be classed as a TOGC.
allow for additional costs such as Stamp Duty
However, this is only a summary and not a
Land Tax (Land and Buildings Transaction Tax in
definitive list of all TOGC conditions or rules.
Scotland), VAT, Council tax, legal costs and our
fees. We believe Stamp Duty Land Tax, Land
If the previous owner had opted to tax and
and Buildings Transaction Tax and VAT do not charged the tenant VAT on the rent, we must
apply to transfers of property between pension opt to tax and continue to charge the tenants
schemes, but please get legal advice as we can’t VAT on the rent.
comment on tax affairs.
If the previous owner did not charge the
For further information relating to Stamp Duty tenant VAT (i.e. the rent was exempt), we
Land Tax or Land and Buildings Transaction Tax, must continue to charge “exempt rent”.
please refer to our website -
http://www.xafinity.com/self-invested-
The effect of the transfer must be to put the
new owner in possession of a business
pension/Tax-Information which can be operated as before.
On request we’ll arrange to opt to tax the The business, or part business, must be a
property for VAT but we’re not VAT experts so 'going concern' at the time of the transfer. It
you must ask your adviser whether it’s can still be a 'going concern' even though it is
appropriate. unprofitable, or is trading under the control of
a liquidator or administrative receiver, or a
If the purchase is with a third trustee in bankruptcy, or an administrator
party, and we’re requested to appointed under the Insolvency Act 1986.
opt to tax the property for
VAT, a separate VAT
The assets that are being transferred must
be intended for use by the new owner in
registration will be required.
carrying on the same kind of business. If the
There will be additional receiving party intends to use the assets for a
requirements for the different kind of business, then you must
administration of VAT which charge VAT in the normal way. If the
are detailed in this guide. receiving party intends in due course to use
the assets for a different kind of business, the
transfer may still be a TOGC if the receiving
arrangement continues the old use initially.
Transfer of Going Concern / VAT The test is whether the receiving
arrangement intends to carry on what the
We must be informed if the property is currently assets have been used for on receipt.
registered for VAT and if this will continue when
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There must not be a series of immediately The full guidance can be found under Section
consecutive transfers of the business. 7.2 “Joint owners of land or buildings” of
HMRC Notice 742. This can be found from
Where the transferor of the property or part the link below:
of the property is registered for VAT, the
receiving party must be registered or at the http://customs.hmrc.gov.uk/channelsPortalW
date of the transfer be required to be ebApp/channelsPortalWebApp.portal?_nfpb=
registered for VAT because all of the true&_pageLabel=pageLibrary_ShowContent
conditions for compulsory registration are &propertyType=document&id=HMCE_CL_00
met, or have been accepted for voluntary 0154#P282_32187
registration. This condition is not met if the
Operation
receiving arrangement is not registered and
is not required to be registered for VAT.
We will require a third party to carry out the
There must be no significant break in the VAT administration for the “partnership”.
normal trading pattern before or immediately This would generally be an accountancy firm
after the transfer. with appropriate professional indemnity
insurance. This insurance will ensure that
The transferring party is responsible for the “partnership” is covered if there were to
applying the correct VAT treatment and may be any issues with the VAT administration
be required to support their decision. If the that caused a financial liability. A formal
transaction is to be treated as a TOGC, the agreement should be in place between the
transferring arrangement must be satisfied party providing the VAT administration and
that the SIPP’s option to tax is in place by all parties that jointly own the property.
the relevant date.
The party carrying out the VAT administration
Joint property purchases with would be responsible for the following:
3rd Parties: VAT issues − registering the partnership for VAT and
opting to tax the property before a
This section is designed to outline additional property purchase completes;
considerations when purchasing a property, that
is subject to VAT, with a third party. This can − considering any Transfer of Going
include purchases that will be jointly owned by Concern implications and ensuring any
the SIPP and the SIPP member as an individual, deadlines for registration or opting to tax
the SIPP member’s company or any other third are met where applicable;
party whether an individual or a company.
− preparation of rental invoices on behalf
of the partnership;
HMRC Requirements
− administration involved in settling
HMRC Notice 742 Land and Property invoices that have been raised against
explains that where there are joint owners of the partnership;
land and buildings HMRC will treat this as a
single person making a single supply for VAT − administration of all VAT reporting, i.e.
purposes. The result of this is that the joint quarterly VAT returns.
owners register for VAT as a “partnership”.
Although this is the basis of the registration It’s essential that the VAT registration and
no legal partnership is required and the joint the opting to tax is undertaken prior to the
owners are not treated as partners for any property purchase completing. If this is not
other purpose. done it could lead to delays or potentially the
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inability to reclaim the VAT paid on the Aborted transactions
property purchase.
The VAT administration costs in respect of A transaction may need to be aborted at a late
the SIPP ownership of the property only can stage but our fees and legal fees may still be
be made from the SIPP. The other owners payable. Also, if a SIPP has been set up and
must pay their share of the costs contributions paid to meet the costs of the
independently from the SIPP. proposed transaction, the SIPP can’t simply be
cancelled and contributions refunded.
VAT Bank Account
Insurance
A separate bank account will be needed for the
“partnership” to manage all rent and property The property must be fully insured at all times
expense payments. Any net rental payments will and this is your responsibility. We won’t permit
be moved across to the SIPP bank account when uninsured properties under our SIPP. The
we received them, leaving the VAT in the insurance must be in the name of Xafinity
“partnership” account for payment to HMRC. Pension Trustees Ltd as owners, and provide
cover, without exception, for rebuilding costs,
We can open an account with Royal Bank of flood, public liability, malicious damage,
Scotland plc as the joint VAT bank account. This terrorism, legal expenses and three years’ loss of
can be operated with us as sole signatory or as rental.
co-signatory with the joint owner(s).
For land only transactions a bare minimum of
VAT Guidance public liability insurance must be in place.
We’re not VAT experts so we strongly If we do not receive evidence that suitable
recommend everyone, including the SIPP property insurance is in place when the SIPP
member, seeks advice on the VAT acquires the property, and at each following
implications. This can become quite a complex insurance renewal date, we’ll arrange this
area when there’s more than one party involved, through Arthur J. Gallagher with the cost of the
particularly where the parties leasing the property insurance being payable from SIPP funds and
are connected to any or all of the joint owners. we’ll receive a commission payment equivalent to
25% of the premium paid.
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Property purchase: a summary
Submit the We will review the You must ensure
Property Purchase property valuation , On receipt of there are enough
Questionnaire , the funding clearance from cleared funds in
Copy of the survey position including Wilbourn & Co, or the SIPP bank
/ valuation and any borrowing. If an acceptable account and
supporting acceptable in rating on an borrowing is
paperwork and principle, the Environmental agreed in principle
make initial steps survey is passed to Screening Report, (if needed) to
to arrange Wilbourn & Co for we instruct your cover purchase,
borrowing (if an initial chosen solicitors. Stamp Duty Land
appropriate). environmental Tax, VAT etc.
check.
We’ll seek
The SIPP solicitor
confirmation if
On request from will deal with the
transfer is a
the SIPP solicitor seller’s solicitor,
Transfer Of a Appropriate
(with paperwork), the tenant’s
Going Concern property insurance
we’ll arrange the solicitor and the
(TOGC) and if an will be put in place
release of funds lending Bank (if
option to tax is and you will
from the SIPP appropriate). The
required before provide us with
bank account to SIPP solicitor will
completion. evidence of this.
the SIPP solicitor also ensure an
VAT advice must
for purchase. EPC is obtained, if
be taken before
necessary.
proceeding
The SIPP solicitor
confirms
completion of the If the rental on the
purchase (plus any We ensure that property is subject
relevant lease) to any mortgage to VAT, we’ll issue
us and we’ll advise payments are met the VAT invoice to
accordingly. The from the SIPP the tenant and
original bank account. ensure that VAT is
documentation is paid to HMRC.
retained by the
SIPP solicitor.
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Property leasing: a summary
Property Leasing
SIPP is set up with property
Questionnaire and supporting
held as an asset.
paperwork submitted.
We consider the proposed
Upon request and if lease, lease amendments or
appropriate, we make VAT lease surrender. If acceptable
election. in principle, we instruct your
chosen solicitors.
You must ensure there are The SIPP solicitor will deal
sufficient funds in the SIPP with the tenant’s solicitor and
bank account to cover any other parties. The
EPC/other costs and Solicitor will be asked to
expenses. You must also prepare the EPC (if required).
evidence appropriate property We’ll pass this to the solicitor
insurance is in place. once available.
If the property is subject to
VAT, we'll issue the VAT The SIPP solicitor confirms
invoice to the tenant and completion of the lease to us
process ongoing VAT returns. and we tell you. The SIPP
For early termination of lease, solicitor keeps the original
we'll process a final invoice up documentation.
to exit date.
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Property sale: a summary
As Xafinity Pension Trustees Limited (XPTL) is we must be involved in the process of engaging
the property owner we must be fully involved in the marketing company. All costs for this must be
the process. paid by the SIPP.
If the property is being sold to a connected party If there is a lease to a connected party which is
the sale price must be supported by a recent being surrendered prior to sale, without a break
open market valuation prepared by a RICS clause, this must be surrendered on fully
qualified surveyor, otherwise you are free to commercial terms with any premium due on
agree the best price with the other party. surrender being supported by a recent open
market valuation prepared by a RICS qualified
The sale of a property is a transaction which surveyor. Once you have found a willing party to
requires an Energy Proficiency Certificate (EPC). sell the property to please fully complete the
If the property has been purchased, or a new SIPP property sale questionnaire, and return with
tenant put in place in the past 10 years we can a completed SIPP commercial property:
still use the previous EPC. member’s resolution.
If you wish to use a marketing company to
promote and sell your property please remember
We instruct your chosen
Submit the Property Sale We consider the proposed solicitors and provide them
Questionnaire and sale and the position with with full details of the
supporting paperwork. any existing borrowing. proposed sale and any
borrowing.
Following the repayment of The SIPP solicitor will deal
any borrowing, the SIPP with the purchaser’s If an EPC has not been
solicitor will credit the funds solicitor and the repayment prepared in the past 10
to the SIPP bank account. of any outstanding years we'll appoint your
We will provide the SIPP borrowing (if appropriate). chosen accredited EPC
solicitor with the bank We will also be fully provider.
details. involved this process.
If appropriate, upon If rent was subject to VAT,
The SIPP solicitor confirms
request from the SIPP we'll issue a VAT rental
to us the sale completion,
solicitor, we’ll issue a VAT invoice to the tenant for the
assignment (or otherwise)
invoice for the sale. We’ll period up to sale, ensure
of any lease and clearance
ensure that VAT is paid to VAT is paid to HMRC and
of any borrowing. We'll
HMRC and complete the complete the quarterly VAT
advise you accordingly.
quarterly VAT return return.
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Surveyor’s guide: surveys and valuations
The information in this section is for the appointed surveyor.
As the appointed surveyor you must comply with − Colour photographs of the property -
the following: including all elevations and relevant
interior areas.
Your survey must be addressed to Xafinity
Pension Trustees Ltd and must include: − Confirmation that the property is
commercial/agricultural and that no part
− Written confirmation that you’re part of of the property is residential.
the RICS Valuer Registration Scheme
and that you have no conflicts of interest. − Confirmation of the planning use/
approval.
− A contact name, telephone number and
email address at your firm for enquiries − Condition of property and whether there
on the survey. is any sign of subsidence necessitating a
structural survey for example.
− A copy of your professional indemnity
insurance certificate. − Any repairs required.
Your report must be reasonably detailed and − Any features which would require a legal
set out: confirmation/opinion, such as rights of
way.
− Property address, description and its
location. − Open market capital value.
− A plan showing the legal boundary of the − Open market rental value.
property and its location. Ideally this can
be obtained from Promap. − Day one insurance reinstatement value.
− Confirmation of the age of the property Completion of the RICS property observation
surveyed and if this is a listed building or checklists referred to in UK GN1 of the Red
not or if it is adjacent to an area of Book (including the Rural Checklist if
special designation such as an SSSI or appropriate) and Property Insurance
conservation area. Questionnaire. See also “Contamination, the
environment and sustainability: Implications
− Full construction details, including for Chartered Surveyors and their clients” (3
rd
highlighting whether there is any element Edition).
of the roof that is flat, together with
details of the finishes. In addition, we deem the following as
material considerations for the purposes of
− Confirmation of the property’s current the report that you produce: -
use. Where it is a shop, please confirm
what goods / services are currently being − Disclosure of whom the obligations of
sold. “Dutyholder” fall upon in respect of the
Control of Asbestos Regulations 2012.
− Confirmation if the flooring is concrete or
wooden.
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Surveyor’s guide: surveys and valuations
− If the property is affected by radioactive Philip Wilbourn will guide you in what is required
media or sources. to complete the survey in respect of historic
contamination and flooding issues, by assessing
− Disclosure of whom the obligation to the essential documents:
provide access for disabled persons falls
− upon under the Disability Discrimination
Draft survey
Act 1995. Colour photographs.
− Disclosure of who is the “Responsible Completed Checklist.
Person” as defined under the Regulatory
Reform (Fire Safety) Order 2005 (SI There is no charge for this service
2005 No.1541).
This assistance will result in a survey which can
Any other material matters that you need to be used to determine if the property is an
bring to our attention. acceptable investment under the Xafinity SIPP.
The survey must be signed by an Wilbourn & Co can be contacted via email
FRICS/MRICS. (Philip@environmental-surveyors.com, or call
07973797011).
Working with Wilbourn & Co
Please note if you decide not to take this
It’s imperative that environmental issues are fully assistance from Wilbourn & Co and your survey
addressed as set out by fails to meet our requirements the transaction
VPS 2 (k) (l) (m) and VPS 4 Paragraph 2.5 (e) (f) may be delayed.
and (g) of the Red Book 2014.
of the Red Book. To help ensure this we have
appointed Wilbourn & Co to be our nominated
environmental expert.
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Environmental risk and concerns
Overview rated 3 or over requiring further investigation
before any final decision can be taken whether a
It’s essential when owning property to be aware transaction can proceed, there may also be
of the impact of environmental law and the additional insurance requirements on properties
measures that need to be taken. with a higher risk of flooding.
Since April 2000 Local Authorities have been Further checks
under a duty to inspect their areas to determine
whether any land should be recorded as being If on reviewing the survey, Wilbourn & Co
contaminated. Under the law, environmental believes that a potential environmental risk may
issues can give rise to liabilities for the owners or exist, arising from either historic land use or the
occupiers of a property. These liabilities can be existing occupation of the site, they will
punitive in the form of fines or imprisonment and recommend that an Environmental Screening
financial in relation to costs or damages for Report (ESR) be carried out. Where we receive
remedying the environmental problem. this recommendation, the proposed purchase
can’t be agreed until an ESR is carried out and
The Water Bill has just passed through an acceptable rating obtained. Around one in
Parliament and the government has agreed to three properties may require an ESR.
create a flood reinsurance facility called Flood
Re. But, this doesn’t cover commercial property Environmental Screening Report
or Small Medium Sized enterprises. As a result
the affordability or availability of insurance cover (ESR)
for flood risks may affect the Capital Value.
Wilbourn & Co will send us two
copies, one of which is for you.
Wilbourn & Co Whether the property transaction
Wilbourn & Co is an independent firm of can proceed will depend on the
Chartered Environmental Surveyors who are information contained within the
appointed to protect both our and your interests. “Risk Assessment” part of the
ESR. This will show whether the
We receive no financial incentive for using property is:
Wilbourn & Co.
Low Risk
Environmental risk: initial check Low to Medium Risk
We’ll provide Wilbourn & Co with a copy of any Medium to Low Risk
survey that is prepared in relation to any
proposed purchase. Medium Risk
Wilbourn & Co will undertake a review of the Medium to High Risk
flood risk of the property as part of its High to Medium Risk
environmental check and provide this to us, and
we’ll communicate this to you. Flood risks range High Risk
from 1 (very low risk) to 4 (high risk) with any
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The report will also give information about the If the property in question is or has been subject
property and list any recommendations or to petroleum licensing a letter addressed to the
questions that should be dealt with. It may also local Petroleum Licensing Officer will be required
indicate that further reports are required (e.g. a from the present owners with the following
coal authority mining report). If anything is raised suggested wording:
in the risk assessment it must be dealt with prior
to the property transaction. “Re: Property Name and Address
We’ll only allow property into a scheme with a Wilbourn & Co are presently carrying out
risk assessment of: research on the above site. We as owners give
our authorisation for the release of any petroleum
Low Risk or licensing information held on your files to
Wilbourn & Co.”
Low to Medium Risk
Anything higher than this can’t proceed. In If there is nothing in the survey that needs further
such cases the report may detail remedial actions investigation, Wilbourn & Co will confirm this to
which if taken would move the assessment to an us. For these cases, no fees are payable to
acceptable rating. Subject to those actions being Wilbourn & Co and an ESR is not required.
taken the purchase could then proceed.
Please note that at all times Wilbourn & Co will
report to us and we’ll then liaise with you, the
The ESR & costs surveyor, solicitor or adviser. Wilbourn & Co has
been instructed not to deal directly with any party
Where an ESR has been recommended and you
other than us. For further details of Wilbourn &
decide to proceed, you or we (from a client
Co, please visit www.environmental-
account) must provide the following:
surveyors.com.
a written instruction to Xafinity to prepare an
ESR;
an Ordnance Survey extract clearly
illustrating the legal boundaries of the site in
question;
a cheque for £850.00 plus VAT made
payable to Wilbourn & Co;
an additional £150.00 plus VAT for
Environment Agency/SEPA data (if required);
an additional £150.00 plus VAT for the review
and interpretation of any environmental
documentation you would wish to be
considered plus copies of any such
documentation.
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SIPP borrowing
Borrowing limits In specie transfers
A SIPP can borrow up to a total of 50% of its net Borrowing can be repaid before an in specie
asset value, with any borrowing for VAT transfer. If so, and any charge is removed, there
purposes included in this limit. You must ensure will be fewer parties involved in the transfer which
that borrowing repayments can be met by the should result in a more efficient process.
SIPP from liquid assets and/or rental income. However if this isn’t possible you’ll need to
consider your options for supporting the
A SIPP can borrow from any individual, company borrowing in advance of the transfer taking place.
or financial institution but any connected party
transaction must be on an arm’s length basis and Borrowing: in specie transfer
demonstrated by documentary evidence from a
High Street bank outlining the terms and from existing pension schemes
conditions of equivalent borrowing. The loan
50% is the normal level of borrowing allowed by
offer must be made to Xafinity Pension Trustees
current legislation. However, if the borrowing
Ltd and the lender must agree to limit our liability
now exceeds 50% of the net assets (e.g.
under the loan to the assets of the individual’s
because it was agreed before April 2006 when
SIPP.
the limit was 75% of the net assets), this may still
Full HMRC guidance is available here be acceptable subject to the borrowing remaining
http://www.hmrc.gov.uk/manuals/rpsmmanual/RP with the same provider and the value remaining
SM07104000.htm the same. Please tell us about this before
committing to any transfer. Please also
Borrowing from a bank investigate if the new borrowing will result in the
bank imposing new terms as this may result in
You and your advisers should identify potential the in specie transfer not being possible.
lenders to the SIPP when considering the
property purchase. We do have contact points at Bank charges: in specie transfer
the SIPP lending units at the following banks:
Each bank’s terms will be different if you transfer
Bank of Scotland borrowing as part of an in specie transfer from an
plc existing pension scheme. Please speak to your
lender directly regarding this.
Barclays
Royal Bank of Other costs: in specie transfer
Scotland
Each bank’s terms will be different. Please
speak to your lender directly regarding this.
Contact details are available upon request by This list is not meant to be exhaustive, please
calling our Sales Support Team on 01786 speak to your financial adviser for more
237013. information and the issues specific to your
circumstances.
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Leasing the property: lease terms
Where the property has a lease in place for over the landlord is expected to enforce the lease
five years, rent reviews should be in place for at as any 3rd party would. This includes
least every three years of the term. A property pursuing outstanding rent and any “late
can be purchased subject to an existing lease, on payment interest” in accordance with the
the basis that the terms of that lease are lease.
acceptable to us.
In particular, there must be a limitation of
liability clause. This is required as the property
will be owned by Xafinity Pension Trustees
Limited (XPTL) in its capacity as Bare Trustee of
The Xafinity SIPP on behalf of your SIPP.
Therefore, when entering into any new leasing
transactions or purchasing a property subject to Head leases and sub leases
an existing lease, you must limit XPTL’s liability
to the value of your SIPP assets. A property can be fully leased to one party. That
party can then sub-let parts of the property to
Existing leases on purchase will run their course, others (the head lease must allow sub-letting).
thereafter new leases must be for a minimum of However, the head tenant is responsible for the
three years. full rent for the property, as set out in the head
lease, for the full duration of the lease term,
We’ll need clear instructions from you on the
regardless of the position with the sub-tenants.
terms of any new lease being prepared for the
property, plus confirmation of the following: Where a head tenant is unable to pay the
ongoing rent and the lease doesn’t allow sub-
full name of tenant; letting, separate leases can be considered. This
lease term (minimum of three years); is important if the head tenant is a connected
party, as unpaid rent could lead to tax penalties.
rent review dates;
For example, a connected party head tenant
break clause dates (if any); enters into a fully commercial lease with the SIPP
(as landlord). The head tenant also enters into
rental review terms; and
three sub-leases with different sub-tenants and
any other special terms. relies on this rental income to cover its own rent.
If one of the sub-tenants then leaves, resulting in
Leasing to connected parties a loss of rental income for the head tenant, this
has no bearing on the rent due to the landlord.
Information about ‘connected parties’ is
The head tenant must continue to pay the
contained in your SIPP Member Handbook. The
commercial level of rent agreed in the head
tax rules require that:
lease. Failure to do so could lead to tax charges
being levied on both the head tenant and the
a full commercial lease must be in place; and
SIPP.
rent must be at a market rate; and
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Leasing the property: rent
Rental amounts
When a property is leased to a “connected party”
the lease must be in line with the rental valuation
prepared by a RICS surveyor. We’ll require sight
of the survey supporting the valuation before we
can agree to use the lease.
When leased to an “unconnected party”, you and
your adviser can negotiate the best possible rent
and rental terms you can from the tenant, so we’ll
accept the rent at the current level.
Rent arrears If the tenant is in financial difficulty, HMRC will
accept, in principle, the re-negotiating of lease
We can decline a property (or a lease) if there terms to allow a lower rent or a rent holiday. In
are rent arrears at the time of purchase. Where this instance:
property is leased to a connected tenant and rent
arrears occur: financial difficulty must be demonstrated - the
tenant’s accountant/auditor would be
unpaid rent is initially treated as a debt; expected to provide evidence to support this;
we, as trustee of the SIPP, will take steps to independent professional advice must be
recover outstanding rent and late payment sought (e.g. from a surveyor) when re-
interest, on a commercial basis; and negotiating the lease to show that it is on a
commercial basis; and
if the outstanding rent and late payment
interest can’t be recovered, the outstanding where the tenant is a company, HMRC does
amount could be treated as an Unauthorised not expect dividends to be paid to
Payment. This would result in HMRC tax shareholders in these circumstances.
charges and we will discuss the options open
to you if this occurs.
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21
Developing a property
As Xafinity Pension Trustees Limited (XPTL) will completion date. We’ll also need details of how
be the property owner, we must be fully involved the SIPP will pay for the work.
in the process. All contracts must limit XPTL’s
liability to the value of your SIPP assets. Legal agreement
All of the requirements set out below must be in Before any work commences, we also need to
place before we’ll give our written consent for enter into legal agreements with the contractor,
work to start. Also, if the scheme is borrowing usually through a Joint Contracts Tribunal
money to pay for the work, we must confirm that Agreement (JCT). This must be reviewed and
the borrowing is acceptable before it can agreed by the appointed quantity surveyor.
proceed. We reserve the right to obtain a
solicitor’s review of all contracts before signing. Residential development
In addition all invoices must be made to, and paid A property is deemed ‘residential’ when it’s first
by, your SIPP. Nobody else should pay any used, or capable of being used, as a dwelling.
invoices for the SIPP as they might not be repaid. This is normally when a certificate of habitation is
issued (or building control certificate in Northern
Advice Ireland). Hence the property must be sold before
the certificate is applied for. In addition, the site
You must obtain proper advice, in writing, from
must not be used for habitation or dwelling by
someone qualified and experienced in financial
anyone at any point of the development whilst
matters and pension scheme investments. We
owned by the SIPP. Failure to observe these
don’t need a copy of the advice.
requirements could lead to a significant tax
However, we’ll require you to sign a document to charge being levied by HMRC against the SIPP.
confirm you’ve received advice on the practical
and financial viability of the proposed Connected parties
development. We’ll also require an appropriate
If anyone carrying out the work for the SIPP is
expert to confirm that related contracts are
connected to you we’ll need copies of quotations
acceptable for you to sign.
(ideally three quotes) for the work to be carried
out. These are needed to show that the work is
Quantity surveyor and plans
on fully commercial terms. If the contractor is
As we can’t be on-site or supervise the contract, unconnected, we won’t insist on quotations,
a quantity surveyor must be appointed to act for although it’s always prudent to get some.
XPTL. You must nominate a quantity surveyor
and provide their details. A contract will be put in Revised valuations
place between XPTL and the quantity surveyor.
Following completion of work, the property must
You must provide us and the quantity surveyor be revalued by an independent surveyor. The
with details of planned works, including statutory valuation should show the new open market
approvals (e.g. planning permissions), value and revised rental value. Where the
architectural plans, details of expected costs, property is leased to a connected party, the new
proposed start date of the work and the expected rental amount must mirror the revised open
market rental valuation.
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Energy Performance Certificates (EPC)
What’s an EPC? When’s an EPC required?
An EPC provides a rating, with ‘A+’ being the The owner of a commercial building who sells, or
most efficient and ‘G’ being the least efficient, of rents it to a new tenant, (or markets it for either
the environmental efficiency of a commercial purpose) must by law obtain an EPC and make it
building, much the same as the certificates that available to prospective purchasers or new
are given to white goods. tenants at the earliest opportunity. Xafinity
Pension Trustees Ltd, as sole trustee of the
It is based on the energy efficiency of the building SIPP, is responsible and will arrange for this to
fabric, heating, ventilation, lighting and any be done.
cooling systems and must be accompanied by a
report containing recommendations for improving For an in specie property transfer, it is not clear
the energy performance of the building. from legislation whether or not an EPC is
required prior to transfer. When a property is
being transferred to Xafinity, it will be a decision
for the trustees making the transfer to take. Our
view is that an EPC is required, and where we’re
making the transfer we’ll require an EPC to be
produced before the transfer can complete.
When is an EPC not required?
It is our understanding that an EPC is not
required for listed buildings, places of worship,
workshops or industrial or agricultural buildings
with low energy usage, however as this is a legal
issue we will follow the guidance of the SIPP’s
solicitor.
Who can prepare an EPC?
An EPC can only be obtained from an accredited
EPC specialist.
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Our property partners
Overview: panel solicitors Non-panel solicitors
Over the years, we’ve developed links with Whilst we suggest that you appoint one of the
various companies in relation to property above panel solicitor firms, you may prefer to
transactions, which we use to streamline choose your own. The panel solicitors are
procedures and overall costs. familiar with our SIPP, its Trust Deed and our
requirements to ensure your pension fund is
In relation to legal work, our chosen solicitor protected.
partners include:
If you still prefer to use a non-
England & Wales: panel solicitor, please check that
they have processed a SIPP
− Bevirs Solicitors, Royal Wooton Bassett, property purchase before. If they
Wiltshire
lack experience in this field, this
− HCB Solicitors, Birmingham could lead to delays in your
property transaction and
Scotland: potentially higher fees.
− Harper Macleod LLP, Glasgow
Environmental review partners
− Anderson Strathern LLP, Glasgow
Our chosen environmental experts are Wilbourn
Northern Ireland: & Co, who specialise in every aspect of
environmental risk assessment and
− Shean Dickson Merrick, Belfast
management. We don’t accept environmental
Based on past experience, our preference is to reports/reviews or opinions from any other
appoint one of these solicitors to act on behalf of sources and all property related transactions are
your SIPP in connection with a proposed property referred to Wilbourn & Co in advance before they
transaction, It should be noted that as Xafinity can proceed.
Pension Trustees Limited (XPTL) will be sole
owner of the property then the formal Solicitor and environmental fees
appointment is between your chosen solicitor and
XPTL on behalf of your SIPP. For the avoidance of any doubt, we receive no
financial incentive from any of the solicitors
named in this guide, or from Wilbourn & Co.
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Bevirs Solicitors (England & Wales)
Bevirs is a three office practice in North Wiltshire Bevirs Fees
with offices in Swindon, Royal Wootton Bassett
and Calne. They have 7 partners and 39 staff. UK conveyance charge: purchase with
Their dedicated pensions property team consists vacant possession and no mortgage
of Sonyia Woolnough a Solicitor and Partner with
over 25 years experience, Edward Spearey a Property purchase price up to £1,550
solicitor with like years experience and Helen £250,000:
Brockhurst who qualified as a solicitor in 2004.
Property purchase price between £1,800
They’ve worked with various pension scheme £250,000 and £500,000:
administrators throughout the country over the
Property purchase price between £2,500
last 16 years. Bevirs has vast experience in
£500,000 and £1,000,000:
pensions property work throughout England and
always strive to achieve the best outcome as
smoothly as possible.
UK conveyance charge : purchase with
For the avoidance of any doubt, Xafinity receives existing lease in place and no mortgage
no financial incentive from Bevirs.
Fee as per above plus £300
Contact details
Address: Sonyia Woolnough, Leasing property
Bevirs Solicitors
New Lease – Connected Party £950
141 High Street rd
New Lease – 3 party £1,300
Royal Wootton Bassett
Wiltshire
SN4 7AZ
Important notes
Website: www.bevirs.co.uk All charges are exclusive of VAT and outlays
(e.g. registration dues, stamp duty land tax). If
Telephone: 01793 848900
the work involved changes from that for which the
Fax: 01793 853191 fixed fee has been agreed then Bevirs will
discuss with you what further fees may be
Email: Sonyia.woolnough@bevirs.co.uk
required. If Bevirs is appointed to act for both the
SIPP and a heritable creditor of the SIPP, the fee
for acting for the mortgagee will be charged on a
time cost basis (subject to an agreed cap). Fees
for purchases of properties above £1 million will
be subject to separate agreement.
professional | proportionatewww.xafinitySIPP.com
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HCB Solicitors (England & Wales)
HCB Solicitors is a large regional firm with offices HCB Solicitors Fees
in Birmingham, Lichfield, Walsall, Redditch,
Alcester, Stratford upon Avon and Solihull.
UK conveyance charge: purchase with
They have specialised in this type of work for vacant possession and no mortgage
many years and can take the pain out of what Property purchase price up to £1,250
can be a complicated process. £250,000:
Their fees for this work are fixed and transparent. Property purchase price between £1,450
The fees listed provide a guide for straight £250,000 and £500,000:
forward matters, however, they are happy to
Property purchase price between £1,750
provide a separate quotation if your situation
£500,000 and £1,000,000:
does not fit within the price guide.
Daniella Tarbuck, a Director of HCB Solicitors
leads the team who specialises in commercial UK conveyance charge: purchase with
property work within SIPP and SSAS pension existing lease in place and no mortgage
schemes. Daniella and her team have the
Fee as per above plus £450
experience and expertise to complement any of
their innovative structures.
For the avoidance of any doubt, Xafinity receives Leasing property
no financial incentive from HCB Solicitors.
New Lease – Connected Party £950
Contact details rd
New Lease – 3 party £1,450
Address: Andrew Jones Important notes
HCB Solicitors Ltd
Croft House All charges are exclusive of VAT and outlays
(e.g. registration dues, stamp duty land tax).
Moons Moat Drive
HCB reserves the right to make additional time-
Redditch based fee charges where there are any unusual
Worcestershire elements involved or where the title is particularly
B98 9HN complex or where lost deeds or documents have
to be traced / ordered up. If HCB is appointed to
Website: www.hcbsolicitors.com act for both the SIPP and a heritable creditor of
Telephone: 01527 406363 the SIPP, the fee for acting for the mortgagee will
be charged on a time cost basis (subject to an
Fax: 01527 62347 agreed cap). Fees for purchases of properties
Email: andrewjones@hcbsolicitors.com above £1 million will be subject to separate
agreement.
professional | proportionatewww.xafinitySIPP.com
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Harper Macleod Solicitors (Scotland)
Harper Macleod advises a number of pension Harper MacLeod Fees
scheme administrators and has vast experience
in all aspects of commercial property work. The
UK conveyance charge: purchase with
firm is one of the top ten legal firms in Scotland,
vacant possession and no mortgage
and is committed to excellence in its standards of
service delivery, client care and communication. Property purchase price up to £1,250
£250,000:
Harper Macleod emphasises its partner-led,
solution-driven approach, which blends technical Property purchase price between £1,500
expertise with commercial acumen and enables £250,000 and £500,000:
the firm to achieve the best results for its clients, Property purchase price between £2,250
at competitive prices. £500,000 and £1,000,000:
For the avoidance of any doubt, Xafinity receives
no financial incentive from Harper Macleod. UK conveyance charge: purchase with
existing lease in place and no mortgage
Contact details
Fee as per above plus £600
Address: David Bell
Harper Macleod Solicitors
Leasing property
The Ca’d’ro, 45 Gordon Street
New Lease – £500
Glasgow
Connected Party
G1 3PE rd
New Lease – 3 party £1,000 or if greater
Website: www.harpermacleod.co.uk 5% of the annual rent
Telephone: 0141 227 9318
Fax: 0141 229 7318 Important notes
Email: David.bell@harpermacleod.co.uk
All charges are exclusive of VAT and outlays
(e.g. registration dues, stamp duty land tax).
Harper Macleod reserves the right to make
additional time-based fee charges where there
are any unusual elements involved or where the
title is particularly complex or where lost deeds or
documents have to be traced / ordered up. If
Harper Macleod is appointed to act for both the
SIPP and the heritable creditor of the SIPP, the
fee for acting for the mortgagee will be charged
on a time cost basis (subject to an agreed cap).
Fees for purchases of properties above £1 million
will be subject to separate agreement.
professional | proportionatewww.xafinitySIPP.com
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Anderson Strathern Solicitors (Scotland)
Anderson Strathern is one of Scotland’s leading Anderson Strathern Fees
full service law firms. With over 300 staff based
in their offices across Scotland, they provide
UK conveyance charge: purchase with
specialist legal advice to commercial clients and
vacant possession and no mortgage
public bodies as well as private individuals.
Property purchase price up to £1,250
The principal contact at Anderson Strathern is £250,000:
Ken Gerber, who is a commercial property
lawyer, an accredited specialist in commercial Property purchase price between £1,500
leasing, and a specialist in advising family £250,000 and £500,000:
businesses. Property purchase price between £2,250
£500,000 and £1,000,000:
For the avoidance of any doubt, Xafinity receives
no financial incentive from Anderson Strathern.
UK conveyance charge: purchase with
Contact details existing lease in place and no mortgage
Address: Ken Gerber Fee as per above plus £600
Anderson Strathern LLP
George House Leasing property
50 George Square
New Lease – £500
Glasgow Connected Party
G2 1EH rd
New Lease – 3 party £1,000 or if greater 5%
Website: www.andersonstrathern.co.uk of the annual rent
Telephone: 0141 242 6060
Fax: 0141 221 4733 Important notes
Email: Ken.gerber@andersonstrathern.c
All charges are exclusive of VAT and outlays
o.uk
(e.g. registration dues, stamp duty land tax).
Anderson Strathern reserves the right to make
additional time-based fee charges where there
are any unusual elements involved or where the
title is particularly complex or where lost deeds or
documents have to be traced / ordered up. If
Anderson Strathern is appointed to act for both
the SIPP and the heritable creditor of the SIPP,
the fee for acting for the mortgagee will be
charged on a time cost basis (subject to an
agreed cap). Fees for purchases of properties
above £1 million will be subject to separate
agreement.
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