The rise of television gems such as Homes under the Hammer and Grand Designs has truly whet the appetite of would-be property developers. Buying a dilapidated old building or piece of land and turning it into a palatial home holds a certain thrill, not least because of the considerable gains that can be made. Whilst it is not possible for a pension fund to own residential property, there is nothing to stop it developing either land or non-domestic property into a home. The only stipulation is that the property must be sold before it is awarded a habitation certificate from the local authority (the formal piece of paper that makes it a residential property). The property can be sold to the pension scheme member personally or to any third party. How to: Many old commercial buildings, for example pubs and churches that have closed or industrial units that have been vacated, can often be in a prime location ripe for residential development. Your pension fund can buy most forms of non-residential property and can usually pay for all development costs. TURNING A PROPERTY DEVELOPER DREAM INTO REALITY EXAMPLE Being a bit of a handyman, Alex has long held an interest in property development. When his local church hall came up for sale for £70,000 he immediately recognised that there may be some development potential to convert the hall to a residential home. Initial enquiries with the local authority suggested that a change of use and a planning application would be successful, particularly bearing in mind that the hall was in a residential area. Alex turned to his pension fund to buy the church hall and was delighted when the local authority approved his planning application. His pension fund also paid for the cost of the conversion, which came to another £70,000. As the pension fund cannot hold residential property, it is important that the house is sold before the council provide a certificate of habitation. A sale price of £250,000 has been negotiated with a local resident which results in the pension scheme making a gross return of £110,000. Remember that as there is no capital gains tax payable in a pension scheme, the whole of this profit is tax free. This presents some really interesting opportunities for both amateur and professional property developers, particularly as the pension fund can also pay for development costs. pension fund company For conversion £70,000 To buy £70,000 Sold for £250,000 Gross return £110,000 CHURCH Hall 9 VISIT www.morgan-lloyd.co.uk EMAIL tom.whitlock@morgan-lloyd.co.uk TEL 01275 813726 8