SIPP provides a Way Inn to investment

During his 22-year career in the Merchant Navy, Peter Waters had always had property interests, so when he decided to settle on dry land for good, he set about building a property investment portfolio.

At the time, in 1996, Peter had leased a pub from a brewery and was operating the business successfully. His long term aim, however, was to buy a similar business of his own.

“In the 90s, property was a great investment because values were increasing all the time and banks were queuing up to lend people money,” comments Peter. “It was my bank manager that suggested I take specialist advice on how to manage my property assets and get maximum value out of them and he introduced me to Taylor Patterson.”

Property Profits Taylor Patterson guided Peter on the rules surrounding purchasing commercial property through a SIPP. Just a year later, he found the ideal property, the Alma Inn in Laneshawbridge, Lancashire, a pub with the potential for Peter to add value and increase profitability.

The purchase price for the property was £340,000 and Taylor Patterson worked with Peter to help him understand how he could release money from the SIPP to purchase and improve the property.

Peter continues: “The Alma Inn was a property asset investment and a means of generating an income. Just four years later I was offered £650,000 for the property and went back to Taylor Patterson for more guidance on how to ensure I made best use of the profits from the sale.”

New Challenges Having made a tax free profit on the Alma Inn, Peter decided to take early retirement with a lump sum to make improvements on his home and provide monthly pension payments. However, when the recession hit and interest rates plummeted, Peter’s pension income was reduced. At the same time, property prices fell dramatically, creating opportunities for cash investors to buy property.

Peter continues: “If I’d had to rely on a bank to lend me the money for my next acquisition I would have struggled because they had become very cautious about lending. Once again, however, I was able to work with Taylor Patterson to release funds from the SIPP to help me buy the Craven Heifer Inn in Kelbrook for just £320,000.

“Using a combination of SIPP finance and private funds, I was able to complete the purchase, refurbish the restaurant on the ground floor and create nine guest rooms on the first floor, which immediately made the asset more profitable.”

Improving the Asset Taylor Patterson informed Peter that the pension fund could now charge an increased rent for the property, subject to advice from Peter’s surveyor.

Within a year, the business had become so successful that Peter decided to invest again, this time in an extension to create 10 additional guest rooms adjacent to the building. The SIPP helped fund the extension and the 10 additional rooms now generate a gross income of £700/day when fully occupied.

“At every stage, Taylor Patterson has given me expert guidance on what I can take from the fund and how much I need to raise from other sources,” Peter continues.

“They have also ensured that I keep within the strict SIPP rules to protect the status of my SIPP and ensure that I don’t inadvertently alter my tax liability.”

Future Plans The Craven Heifer now employs a staff of 30 and is fully booked most evenings. Peter is once again utilising the SIPP to add a kitchen extension to maximise capacity in the restaurant too.

Meanwhile, he’s also widening his property portfolio once more and has purchased a further pub, the Bay Horse in Rough Ley, Lancashire, with his brother-in-law.

Peter adds: “This time the asset will not go into the SIPP because it would put the value of my SIPP over the permitted threshold. “Taylor Patterson’s help has been invaluable throughout the process of acquiring and investing in my property and business assets. "I have dealt with the same people consistently over the past decade which means they know my business and my approach and can offer me the best guidance to help me achieve my goals while remaining within SIPP rules.”