To show learners the different financing routes available for supported living properties, including how to use pensions like a SSAS.
Acquire Knowledge, Empower Self.
Our comprehensive learning will equip learners to understand supported living deeply and navigate the associated property investment landscape effectively while avoiding common pitfalls.
Financing Supported Living Property
Module 06: SSAS Pensions & Funding Strategies
Objective
Topics Covered
Traditional buy-to-let mortgages vs. commercial finance
Bridging finance and development loans
How SSAS pensions can be used to invest in supported living
HMRC compliance and SSAS do's and don'ts
Using SSAS to lend to a company (loan-back method)
Working with lenders familiar with supported living leases
01
Traditional Buy-to-Let Mortgages vs. Commercial Finance
Understanding your primary financing options
Buy-to-Let Mortgages
Residential
Best For
Small-scale supported living
Deposit
25% typically required
Assessment
Based on projected rental income
Process
Relatively straightforward
Typically used when acquiring residential properties intended for standard tenants, including smaller-scale supported living arrangements.
Commercial Finance
Business
Best For
Larger supported living blocks
Deposit
25% or more typically
Assessment
Asset value & business income
Term
Up to 25 years available
Essential for expanding supported living portfolios at scale or for properties falling outside standard residential criteria.
Key Insight: Commercial finance can be customized to accommodate unique lease structures, like those in supported living (e.g., long leases with care providers, CPI-linked rent increases).
02
Bridging Finance and Development Loans
Short-term funding for property transformation
Bridging Loans
Term
Several weeks to 2 years
Purpose
Quick property acquisition & conversion
Interest
Higher rates (charged monthly)
Use Case
Auction purchases, fast-track conversions
Short-term finance options designed to quickly secure cash when speed is crucial.
Development Loans
Term
Project-based duration
Purpose
Substantial renovation or construction
Requirements
Detailed planning & exit strategies
Use Case
Major refurbishment & new builds
Critical for bringing older or non-compliant buildings up to supported living standards before securing long-term finance.
1
Acquisition Phase
Use bridging finance for quick property purchase
2
Transformation Phase
Utilize development loans for adaptations and compliance work
3
Long-term Phase
Refinance with commercial mortgage once property is operational
03
SSAS Pensions for Supported Living Investment
Powerful tax-advantaged funding strategy
Small Self-Administered Scheme
A SSAS pension is a powerful tool for company directors and small business owners, offering unique advantages for supported living property investment.
Direct Property Purchase
Direct purchase of commercial properties including supported living buildings (with proper HMRC compliance)
Tax Advantages
Tax-advantaged rental income and growth - rental payments received gross, with no income tax or capital gains inside the SSAS
Pooled Funds
Ability to pool funds from multiple scheme members, allowing acquisition of higher-value assets relevant to supported living
Development Funding
Funding property development or refurbishment necessary for compliance and tenant adaptation needs
Important: SSAS pensions cannot directly acquire standard residential property, but supported living (when operated as commercial property and with a commercial lease to a provider) is permissible with proper structuring.
04
HMRC Compliance and SSAS Guidelines
Essential rules for pension fund investment
Key Compliance Requirements
- SSAS must be registered with HMRC before contributions or investments
- Multiple-member schemes must register with The Pensions Regulator
- No investment in prohibited assets ("tangible moveable property")
- All contributions must be documented and reported
- Loans and purchases must have clear business purposes
Do's
- Register SSAS and await confirmation before making contributions
- Follow all reporting deadlines promptly
- Register multiple-member schemes with regulator
- Use SSAS funds for compliant commercial lending
- Maintain detailed documentation of all transactions
Don'ts
- Don't invest in standard residential property
- Don't make personal loans from SSAS funds
- Don't transfer funds before HMRC registration
- Avoid late registration and poor record-keeping
- Don't make undocumented transactions
Warning: Unauthorized transactions can trigger severe tax penalties. Failing to comply risks tax penalties and invalidation of the pension's tax status.
05
SSAS Loan-Back Method
Using your pension as a business lender
Pension Fund
→
Loan to Business
→
Property Purchase
→
Repayments + Interest
SSAS Loan-Back Rules
Maximum Loan
50% of total fund value
Interest Rate
1% above base rate (minimum)
Loan Term
Maximum 5 years
Security
First charge on tangible assets
Repayment
Capital & interest basis
Purpose
Commercial use only
Benefits
- Loan repayments (with interest) grow the pension fund
- Funds can be used for commercial property purchase
- Supports business expansion and capital projects
- Significant tax advantages for company and pension
Compliance Requirements
- All documents must be formalized properly
- Must adhere strictly to HMRC guidelines
- Clear commercial use must be documented
- Professional advice is strongly recommended
06
Working with Specialist Lenders
Finding finance partners who understand supported living
What to Look for in a Lender
Because supported living involves atypical lease structures, it's crucial to partner with lenders who:
Understand Lease Structures
Comprehend long leases, FRI agreements, and CPI-linked rent increases
Accept Atypical Tenants
Work with care providers rather than private individuals
Recognise Security Profiles
Understand the unique risk profiles of supported living investments
Government Experience
Have experience with local authority or government-backed tenant structures
Specialist Lenders Offer
Higher Loan-to-Value ratios and more favourable terms compared to standard buy-to-let products, reflecting the genuine lower risk often provided by lease-backed supported living.
Key Outcomes
Understand your financing options, even if you're using pension funds
Learn how to structure funding to maximise leverage and tax efficiency