Simply put, company or individual
pension funds are able to own residential, semi-commercial or commercial properties. These funds are able to raise and service commercial mortages in the normal way.
In some cases it is also possible to have the pension fund on a mortgage deed together
with a connected party, i.e a joint mortgage.
In the majority of cases, properties purchased will be on an investment basis, let
on formal leases (residential or commercial) to connected parties e.g a trading
business who's employees, partner(s) or director(s) are sole joint trustees of the
pension fund.
Property types are subject to standard maximum loan to values, but the pension
fund itself is only permitted to raise a mortgage equivalent to 50% of the fund value.
There can be some flexibility, dependent on the composition of the
pension fund itself, particularly if a large element of the total fund comprises
unit trusts, or certain bonds and stocks, as opposed to other assets such as property,
classic cars, fine art, sculptures etc.
Pension fund loans are only placed with Status lenders. Lenders will require
sight of the Original Pension Trust Deed (usually obtained from the Assurance or
Insurance Company as Principal Trustee(s) plus all subsequent Variation Deeds.
Additionally, lenders require sight of an existing or proposed formal lease and
full trading accounts typically for 2-3 years of the connected party. If these are
not available, the lender may look to tie in additional security for comfort.
Rates, terms and flexibility will vary according to the asset strength and composition
of the fund, target property type and trading accounts of the connected tenant.