CASE STUDY – Bridging the Gap from SIPP Ownership to Residential Development

When decades of careful pension planning meet changing business needs, creative financing solutions become essential. Our client faced an unusual challenge, how to unlock a valuable development opportunity from within their Self-Invested Personal Pension whilst staying compliant with pension regulations.

Our client had owned a four-storey commercial property within their SIPP for over 25 years, using it to house the family business. With retirement approaching and the business evolving, they’d secured planning permission to convert the building into four residential apartments, a valuable development opportunity.

However, pension rules created a significant obstacle. SIPPs cannot hold residential assets, meaning the property needed to be purchased from the pension into the client’s personal name before the conversion could be completed. This presented a complex financing challenge that fell outside standard lending criteria.

As a first-time developer taking on a part-completed residential conversion, the client needed funding that would cover both the purchase from their SIPP and the remaining construction costs. The unique structure of buying a property from one’s own pension, combined with development finance requirements, meant very limited lender appetite for the transaction.

The stakes were high. Successfully completing this development would enable the client to repay their residential mortgage and build cash reserves for retirement. Without the right financing structure, years of pension planning and a valuable development opportunity would remain locked away.

Understanding the combination of SIPP structures and development finance proved essential to finding the right solution. We needed lenders who could appreciate the commercial logic of the transaction whilst navigating the regulatory complexities of pension-owned property transfers.

Our established lender relationships allowed us to have meaningful conversations about the case merits. Rather than simply submitting applications, we could explain the client’s circumstances, the solid fundamentals of the deal, and the clear exit strategy through apartment sales.

We focused on lenders with development finance expertise who could assess the part-completed conversion properly. The property’s 25-year ownership history and the client’s business track record provided reassurance, even though this was their first property development project.

By presenting a comprehensive picture including the planning permission, conversion progress, projected values, and the client’s retirement planning objectives, we could demonstrate why this transaction made commercial sense despite its unusual structure.

We secured bridge financing at a competitive monthly rate of base plus 0.47%, reflecting the strong fundamentals of the deal. The funding covered both the purchase from the SIPP and the remaining construction costs needed to complete the conversion.

The facility was structured at under 60% loan-to-value with a twelve-month term, providing comfortable headroom both in terms of security and timeframe. This gave the client breathing room to complete the development work properly and achieve good sales prices on the finished apartments rather than rushing to exit.

The process took longer than typical bridge transactions due to SIPP administration requirements, including additional property valuations mandated by pension regulations. However, by understanding these requirements upfront, we could manage expectations and keep everything moving forward.

This case demonstrates how specialist knowledge of both pension structures and development finance can unlock opportunities that initially seem impossible. When standard lending criteria don’t accommodate complex but commercially sound transactions, the right expertise and lender relationships make all the difference.

For clients with valuable assets held in pension structures, understanding how to navigate regulatory requirements whilst accessing appropriate financing can transform retirement planning outcomes.