Property valuations in your SIPP – when do you need one?

Commercial property is one of the most common assets held within a Yorsipp SIPP. But unlike shares, funds or other investments that are traded on a public market, there isn't a live market price you can check to see what a property is worth.

That's why an independent, professional valuation is so important.

A current valuation gives you a reliable view of the property's market value and helps ensure that transactions involving the property are carried out fairly and at arm's length. It also means the value recorded in your pension's annual reporting is as accurate as possible.

At Yorsipp, we ask for a written RICS valuation in a number of circumstances.

1. Buying a commercial property – if your SIPP is buying a commercial property, we need an up-to-date independent valuation to establish its market value. This is particularly important where the purchase involves a connected party, as it provides independent evidence that the transaction is taking place at a fair market value.
2. Transferring a property into your SIPP – if you are transferring a commercial property from another pension arrangement into a Yorsipp SIPP, an independent valuation is required. This ensures that the property is being transferred into the pension at an independently assessed market value rather than an arbitrary figure.
3. Selling or transferring a property – a new valuation will also be required when a property is being sold or transferred out of the SIPP. Again, the purpose is to establish a reliable market value and demonstrate that the transaction is being undertaken on appropriate commercial terms.
4. Transactions involving connected parties – additional care is needed whenever a transaction involves a connected party. This can include a purchase, sale, lease or rent review involving a connected party. In these circumstances, an independent valuation helps demonstrate that the terms of the transaction are at arm's length and reflect market conditions.
5. Development, refurbishment and changes to the property – a new valuation may also be required where significant development or refurbishment works have taken place. If substantial work has changed the condition, specification or potential value of a property, its previous valuation may no longer provide an accurate reflection of its current market value.
6. Taking benefits from the SIPP - a valuation is also required when you take cash or other benefits from your pensions scheme. In circumstances such as this, where the property isn't being bought or sold, Yorsipp may be able to work from an addendum to the original valuation, rather than requiring a completely new valuation.
    

Even if there has been no purchase, sale, transfer, lease, rent review or significant work carried out on the property, Yorsipp requires a commercial property held within a SIPP to be revalued at least every three years. This gives us a regular, independent assessment of the property's market value and helps ensure that the value recorded for the pension remains up to date.

In most cases, the valuation provided to Yorsipp must be no more than six months old. There can be circumstances where the standard timeframe doesn't quite fit, so if you're unsure whether an existing valuation is recent enough for the transaction you're considering, it's best to speak to the Yorsipp team before instructing a valuer.

Yorsipp does not operate a panel of approved surveyors. You, or your client, can instruct any RICS-registered valuer of your choice, provided the valuation is prepared on a Red Book basis and meets Yorsipp's requirements. This means you have the flexibility to use a suitably qualified professional who understands the property and local market.

It's easy to think of a property valuation as simply another piece of paperwork required when dealing with a SIPP. In reality, it plays an important role in protecting the integrity of the pension investment.

If you're planning a transaction involving commercial property within your client’s SIPP and aren't sure whether your existing valuation is sufficiently recent, speak to the Yorsipp team before proceeding. We can help you understand what is required and whether you need to arrange an updated valuation.