Joint ownership by SIPP investors
There is no limit to the number of investors with SIPPs at Suffolk Life who may pool their funds together, although there may be practical or commercial reasons why they would not wish for any grouping to be too large. Like all joint ownerships, there are then issues to be considered. What happens for example if one of the joint investors dies or simply wants to realise the investment.

The solution is to get joint investors to sign a co-ownership agreement. This will provide that in the final analysis, Suffolk Life may sell the property and convert it back to cash for the benefit of all the investors. But before that happens, remaining co-owners are given rights of pre-emption at market value so that if they wish they can prevent the property being sold provided they buy out the share of the deceased or outgoing owner. Alternatively, they can bring in other investors with SIPPs at Suffolk Life to buy the share of the outgoing owner.

We have no requirement that ownership percentages in the asset are equal. Furthermore joint investors can borrow different amounts towards the purchase price of their share in the property. So long as investors do not borrow more than 50% of the net value of their SIPPs, then unequal borrowings are permissible.  Remember, however, that we buy the property and become the borrower, so the underlying individual borrowings by joint investors are irrelevant to the lender.

It means that a joint owner with no borrowings is potentially greater at risk than a joint owner who is highly geared as the lender has resort to the whole asset in the event of default. On the other side of the coin, however, the joint owner with no borrowings will have the full amount of his share of the rent apportioned to his account. The co-ownership agreement should contain suitable indemnities to cover this potential issue.

Joint ownership with a third party
We are sometimes asked if we can purchase a property jointly with a third party, including the SIPP investor, not using a SIPP with Suffolk Life. The answer is yes and our joint purchase by way of nominee paper sets out the structure involved.

For more details on this subject, please see our talking points and case study.