Because pension contributions are tax-deductible, pension-based financing can be an extremely efficient method of acquiring investment property. Broadly speaking, pension-based financing schemes fall into one of two categories:
The acquisition of an investment property by an investor who finances the purchase by way of a pension mortgage, or
The acquisition of an investment property by the trustees of a pension scheme who, as a result of the new rules enacted by Finance Act 2004, may raise borrowings to finance that acquisition.
Not every property, however, is suitable for a pension-based financing scheme. Typically, the pension policyholder or scheme trustees acquiring a property will require a predictable flow of rental income backed by a quality tenant covenant. Moreover, financing considerations may impose particular price limitations on the acquisition.
Grattan Asset Management's strength in sourcing commercial investment property enables it to meet demanding acquisition criteria such as these. As a result, we have become the natural partner for both investors themselves and intermediaries such as accountants or brokers wishing to use the tax advantages and financial strength of a pension fund to help clients build a property portfolio.
