The decision whether to own or rent your premises depends on countless factors, and you may well have a strong opinion as to which is better for your practice.
There may be a middle ground; purchasing a property through a Self-Invested Personal Pension (SIPP). As with all pensions, contributions are invested in order to sustain growth - in this case, invested in your practice premises.
The VWV Healthcare team has recently assisted James and Kay Hallows to set up this type of arrangement, and you can read more about their transaction. When purchasing a property (whether from you or from a third party), a SIPP will require full searches and enquiries to be carried out to ensure that the property represents a safe investment. On completion of the purchase, a lease will be put in place between the pension fund as landlord, and the dental practice as tenant. Regulations state that the lease must be on commercial terms, and at a market rent. This means that a lease from your SIPP cannot be more beneficial to you as a tenant, than a lease from an unconnected third party landlord.
So, if the terms of the lease are no more beneficial, why might you want to do it? The biggest reason is that the rent payments, rather than lining someone else's pockets, contribute towards your pension pot. The value of property in a SIPP also benefits from financial advantages - for example; Capital Gains Tax and Income Tax do not accrue on investments within the fund. You also have the opportunity to develop a symbiotic relationship with your landlord.
It is important to remember that since the SIPP must behave as a commercial landlord, you cannot treat property held in a pension fund as if you owned it yourself. Therefore, you must ensure that you comply with the terms of the lease when making alterations to the premises or the occupation of them, particularly by obtaining the SIPP's consent before making changes.
A financial adviser can assist you in deciding whether purchasing your dental surgery premises through a SIPP is right for you.