A SSAS may borrow towards a property purchase, within a ceiling HMRC sets at 50% of the scheme's net asset value. These are corporate structures governed by HMRC rules and, as pension schemes, overseen by The Pensions Regulator. Holtram TLPI Ltd is registered with HMRC to administer pensions.
What the 50% borrowing ceiling lets you buy
The borrowing sits on top of the cash the scheme already holds, so it raises what the scheme can spend rather than replacing the fund. A property the scheme could not have bought outright often comes within reach once the borrowing is added.
| Net value of the SSAS | Maximum the scheme may borrow | Total towards a purchase |
|---|---|---|
| £200,000 | £100,000 | £300,000 |
| £400,000 | £200,000 | £600,000 |
| £600,000 | £300,000 | £900,000 |
| £1,000,000 | £500,000 | £1,500,000 |
Illustration of the 50% arithmetic only. It is not an offer of finance and it does not describe what any particular lender will agree.
Where a scheme has more than one member, the 50% is measured against the net value of the whole scheme, so pooled pensions raise the fund and the borrowing available with it.
This is the borrowing limit, not the loanback limit
A SSAS has two separate 50% limits and they govern opposite transactions. The limit on this page is the borrowing limit: money coming into the scheme from a lender, to help the scheme buy a property. The other is the loanback limit: money going out of the scheme as a loan to the sponsoring employer, which is a different transaction with its own conditions and is covered on our SSAS loan rules page.
The kind of property the borrowing is used for
Borrowing is used towards commercial property. That includes the trading premises the sponsoring company occupies itself, and commercial property let to an unconnected tenant. Residential property is not a permitted purchase for a SSAS, so borrowing cannot be used towards one. Property investment through a SSAS covers the permitted categories in full.
How the borrowing is normally arranged
The borrowing is normally a commercial mortgage taken by the trustees from a lender used to dealing with pension schemes, and it is serviced by the rent the property produces. Rent received by a SSAS is not taxed, so the whole of it is available to meet the repayments, and any surplus stays inside the scheme.
A free, no-obligation call to discuss your options.