Woodlands.co.uk

Buying a woodland through a SIPP – Self-Invested Personal Pension.

Buying a woodland through a SIPP - Self-Invested Personal Pension.

Buying a woodland through a SIPP

I thought it would be helpful to share my practical experience buying a Woodland through a SIPP (Self-Invested Personal Pension).   This is definitely possible and reasonably straightforward once you understand the steps that need to be followed. There are however cost implications which make it much more expensive than buying with cash on hand. But it does mean you can use your pension funds and costs can mostly be covered using pension funds.

Firstly you will need a financial advisor to formally recommend a pension provider.  I used this as an opportunity to move an old work pension to a private SIPP that could invest in woodland, plus a few other bits and pieces. For me this was the most expensive element at c.£4k for a full financial review, including the pension arrangements. I did need to do this anyway, so getting a woodland out of it at the end actually made it more palatable.

The SIPP essentially uses your pension funds to buy the woodland on your behalf as an investment in commercial property.   You then lease back the woodland from your own pension, for a reasonably nominal amount (which you are paying back into your pension anyway).   To make it a commercial arrangement this needs to be done on an arms’ length basis.

Therefore you will require

  1. an independent valuation by a chartered surveyor (£1k)
  2.  a tenancy agreement drawn up by a solicitor (£700).
  3. Then there are the normal legal conveyancing expenses / searches etc. ( circa £1.4k)
  4. Lastly, public liability insurance is required at c.£200/year but not a bad idea getting this anyway.

The whole process took around 6 months, admittedly through lockdown when there was a lot of disruption.    Woodlands.co.uk were very helpful throughout.


The above was sent in by one of our recent buyers.



Discussion

Hi
I’m not clear what the tax advantages from this are. Woodlands are exempt IHT I believe and your SiPP can be passed on tax-free up to age 75. Contributions to a SiPP may attract tax relief but paying a rent presumably doesn’t.

Isn’t it better just to buy the woodland personally and contribute directly to your SiPP?

Nick

Nick Bell

3 December, 2020

What a fascinating idea. I too would be very interested to learn of the name of any SIPP providers that support holding silvicultural or agricultural assets.

Adrian W

6 October, 2020

One further question, what rent are you paying (as a % of property value) to make it a legitimate commercial arrangement?
Not that it really matters as long as it’s affordable for you, I get that it’s your money going into your mention fund in the end.

Gavin Spittlehouse

6 October, 2020

Are you able to share the tenancy agreement (with personal details removed)? Also what SIPP provider have you used, I don’t think they all support investment in property.
Thanks.

Gavin

5 October, 2020

I may be interested in this butt what is the % rate of annual return to your SIPP on its investment?
Thanks
Mark

Mark Scanlon

3 October, 2020

Can you send me editorials and examples please

Luke Johnson

2 October, 2020


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