Finance for Founders with Samuel Ajala

Leverage your SSAS Pensions for Property Investing | Brian Harvey | Episode 5 |

• Samuel Ajala • Season 1 • Episode 5

Share episode

Unlocking Real Estate Investment: SSAS Pensions Explained with Brian Harvey

Join host Samuel Ajala in this episode of Finance Founders as he welcomes special guest Brian Harvey, a SSAS pension consultant. Brian delves into the benefits of using SASS pensions to embark on property journeys, shares his own experiences, and provides insights into different types of investments and tax advantages available through SSAS pensions. The conversation covers practical steps on setting up SSAS pensions, examples of successful investments, considerations for joint ventures, and the nuances of commercial versus residential property investments. This episode is packed with valuable information for anyone interested in leveraging their pensions for property investment.

00:00 Introduction and Guest Welcome
00:55 Brian Harvey's Background and SSAS Pension Introduction
02:15 First SSAS Pension Project: Commercial Property
05:24 SSAS Pension and Limited Company Interactions
08:17 Setting Up a SSAS Pension
10:40 Combining Pensions for Joint Ventures
13:24 Contribution Limits and Tax Advantages
14:59 Role and Responsibilities of SSAS Trustees
17:02 Pros and Cons of SSAS Pension Investments
20:31 Commercial vs. Residential Properties
22:03 Ideal Property Strategy for 2024
23:27 Commercial to Residential Conversions
24:38 Challenges with Retail Units
25:07 Industrial and Storage Units
27:09 Current Commercial Property Market Trends
27:44 Using SSAS for Business Investments
34:45 Third-Party Lending Risks
39:12 Setting Up and Managing a SSAS
40:20 Final Thoughts and Advice

Brian Harvey details:
Email: brian@retirement.capital
Mobile: 07584 521847

Brian Harvey Linkedin:
https://www.linkedin.com/in/brian-harvey-ssaspensions/


Discovery call meeting link:
https://calendly.com/brian-rc/45min?month=2024-05

Samuel Ajala:

Hi guys, hope you're well welcome to another podcast finance Founders. Uh, that's right. Finance for founders is our podcast. Uh, my name is Samuel Ajala. I'm your host. And today we're joined by a special guest, uh, who goes by the name of Brian Harvey and Brian himself. He's a SAS pension consultant. anything around pensions and even properties. And specifically we're going to be speaking about that today. We're going to be having a conversation about how you can utilize a SAS pensions, uh, to start your property journey. Uh, and, um, with that being said, I'd like to invite our guest, um, Brian Harvey. Brian. You are welcome. How are you? I'm very good. Thank you yourself. I'm very well. Thanks for asking. So Brian, tell us a little bit about you and what you do.

Brian Harvey:

Okay. I'm, um, I'm a SAS pension consultant. Um, SAS stands for, you know, small self administered scheme. It's a very sort of, uh, a specialist type of pension scheme that's used for investors. Um, I'm actually not a lifetime pensions person. My background was in the software industry. And I came to SAS Pensions through using one myself in, uh, property investment, uh, projects. Um, when I, when I've done a few projects, I started to speak at, uh, property meetings about what I'd done. And this kind of like, uh, developed into quite a lot of presentations. And eventually I got picked up by the SAS Pension industry who said, you know, you seem to understand this, uh, come and work for us. So the last few years now I've been working as a SAS Pensions Consultant and it gives me a slightly different angle to most people in that, in that industry because I've got more in common with the people who are trying to use it for investment in property because That's where I've come from myself.

Samuel Ajala:

Fantastic. So what you've mentioned, um, you were picked up because of you understand it and you've used it, uh, give us some examples of what you've actually done in terms of pension and how you've, uh, how it's benefited you. Okay.

Brian Harvey:

Well, I, I set my SAS up about seven years ago and, um, I, uh, I applied for the. SAS for my company, and then I transferred some other pensions in, uh, pensions that I'd had from previous employments. And, um, I then did a project. Uh, my first project was a commercial property project that I did using the SAS. Now, one of the things that SAS can do is it can buy property as long as it's commercial. It can buy land. It can also lend to your limited company and it can lend to third parties. The first project I did was actually in the SAS itself. The SAS bought the property and it was, um, a couple of units, uh, in a town center in Lancashire and these units were quite big. Um, all together, it was about 6, 000 square feet. And that meant that the business rates on the two units were pretty high. And for that reason, Um, they hadn't been occupied for quite some time and, uh, they needed some TLC. Um, so the, the pension scheme paid 130, 000 to buy them. Now, because it owned them, it pays for everything. It pays for the acquisition costs. It pays for any bills that you incur when you first own the buildings. But it also paid for a remodelling project. So altogether it spent another 120, 000. Remodeling these two large units to turn them into six smaller ones. And that meant that each unit came under the threshold for business rates. So I now had six nice new units, newly refurbished. And, um, they were ready for occupancy. So I, uh, able to get six new tenants in there quite quickly. The 250, 000 spend, um, resulted in a revaluation of 400, 000, which put the value of the pension scheme up. And it also, um, generated 40, 000 a year in rent that was going into the SAS. Um, so the SAS was now growing by 40, 000 a year as a result of that project. Wow. You know, that was an example. That was my first project. Um, it was, it was very useful for me at my age at the time, because if I go back to what my objectives were, I was trying to change my working life at the time. I've been working in the software industry and, uh, I was traveling an awful lot, um, internationally, and I've been doing it for a long time. So I was trying to change my own working life at the time. Now, When the pension scheme increased in value, I was just coming up to the age where I could actually take a 25 percent tax free lump sum out of that pension scheme and put it into my, I actually used it to put into my limited company as a director's loan so that I had money for refurbishments and so on. Um, but then also the 40, 000 pounds a year that was going in in rent, um, I could, if I'd wanted to start to draw that out as a pension, uh, because I was the right age. Now, of course that suited my objectives at that time. But there's many other ways of using a SAS, which could have suited me if I'd been maybe, maybe 10 years younger, um, when I wasn't pension age.

Samuel Ajala:

So when, when you receive your rental income, right? Yes. And you need to pay that, who does that belong to? Does that belong to the pension itself? Does that get paid to your limited company? Who does that belong to?

Brian Harvey:

It goes into the pension scheme. In that scenario, it goes into the pension scheme. Fantastic. There are lots of other scenarios where, you know, you can, you can, you can actually structure that differently.

Samuel Ajala:

Please explain that to me. What are some of those?

Brian Harvey:

So there's a, there's a multiple projects that I've seen recently where, um, a SAS buys a commercial building and, um, your own limited company takes out the lease. With the SAS. So I've seen examples, for example, where, um, maybe the SAS buys a building that's worth 300, 000 pounds and the fair market rent for that building is 30, 000 pounds a year. So you set up a lease while your own limited company pays the 30, 000 pounds a year to the SAS. But it then makes use of that building for multiple occupancy, commercial, multiple occupancy. So it might have a part hotel on some floors. It might have flexible office space, um, a canteen, a gymnasium. It might rent out the parking spaces. So the limited company, the op co is making maybe a six figure profit. And that money is not in the SAS. That money's in your operating company. So the SAS is getting a fair return for its investments in terms of the rental it's receiving. But the limited company, the op co is actually making a good profit that you don't have to wait to get to pension age to, uh, to benefit from. And of course, if it makes, if it makes a lot of profit, maybe you put some of that money into the SAS. Um, you know, to, to, uh, to offset your corporation tax.

Samuel Ajala:

How do you differ? How would they differentiate it? How would they differentiate what belongs to the SAS and what belongs to the company?

Brian Harvey:

It's quite straightforward. So if you think of the SAS almost as a, in this case, the SAS is like the property company and the limited companies, like the, the operating company owns the property and it has a straightforward lease, which says the fair market rent for this property is X and that's the amount that gets paid to the SAS.

Samuel Ajala:

Okay.

Brian Harvey:

And the money that the operating company that makes over and above that belongs to the operating company.

Samuel Ajala:

Fantastic. So it's like a, um, uh, a salon in a commercial building. Uh, the business owners may have it on a lease, pays the, um, uh, rental income to the owners of the property, but they take a profit from the business that they actually operating

Brian Harvey:

through the building itself. Yes, of course. Yeah. So that's an example where you're making money. The, uh, the pension scheme is getting a good return. But you're using an asset owned by the pension scheme to make money outside of the pension scheme in the operating company.

Samuel Ajala:

Fantastic. So can I ask what the journey looked like in terms of actually getting, uh, your SAS pension out? You went through, uh, the company, uh, through your pensions. What was the journey like to actually, uh, release, uh, the funds, the funds from your pension itself?

Brian Harvey:

So, um, first of all, you have to apply to have a SaaS, you have to apply to HMRC, and that's because it's an occupational pension scheme. It's not a personal pension, it's an occupational pension scheme for your company. So first of all, you have to have a limited company. It has to be operational, it has to have a trading element to it. They don't like it if it's just an investment company. Um, and you apply to HMRC, they take about three months to take a look at it at the moment. That does vary, but at the moment it's about three months. Um, they're looking at the company, they want it to be an established company that's trading. If it's published accounts, that's great. If it's not quite old enough to publish accounts, they'll be asking for six months of bank statements to show it's trading. They will then look at you as a person, or you can help to eleven people who are members of the SAS. So we'll look at those people and just make sure that they're fit and proper. And that's mostly looking at, uh, making sure they've not been struck off as directors and that they're not currently bankrupt. So they're looking, they're spending more time looking at the company, really, rather than the individuals to make sure that it's suitable for SAS. Once that's been approved. Then it's a matter of, you know, setting up the SAS bank account and then starting to fund it. And people fund it in one of two ways or both. Um, so the first way is they transfer pensions in. So pensions from previous employment, which is part of what I did. And then also, um, they can put in contributions up to 60, 000 pounds per annum per person, um, out of the company's profits. And that will be offset, um, offset against the company's profits. So you don't pay corporation tax on that money. Legitimately don't pay corporation tax on that money. And of course, the investments that are in the SAS, um, grow tax free. Any rental that's received into the SAS is not taxable. If you sell the property in the future, there's no capital gains tax to pay. So it's a nice tax free wrapper that's a very legitimate way of, uh, of, of, of, you know, not paying too much tax on your investments. Your pension.

Samuel Ajala:

That's fantastic. I want to say to you, if, if I had a group of friends that, uh, we wanted to, um, combine, uh, pensions, uh, we wanted to put a project together. Is that possible? And then how does one possibly go about doing something like that?

Brian Harvey:

Okay. Well, I've got, I've got two, two main answers to that. The first thing is if you're all part of the same company, you could start a SAS where you're all part of the same SAS and you could transfer your pensions in. Um, something to be aware of though, if, if one of you has a lot more in their pension pot than the others will. Then that pot will continue to grow in proportion as your investments, um, your investments make money. You know, if the whole pot grows 10 percent but your pot, your part of it is 80 percent of the pot, then naturally you're going to make more money than your colleague. Um, whereas you're working together in your limited company, you're probably doing investments where you're expecting to make equal amounts. Yeah, that won't happen in a pension scheme. There are one or two ways around that, but they're quite complicated. So that's one way you could do it. Alternatively, if you're working with people who had separate companies and therefore separate SASEs, the SASEs can do joint ventures together. So a SASE can own 50 percent of a building and the other 50 percent could be owned by another SASE or by a limited company or by someone else's limited company. So there's various ways in which a SAS can joint venture.

Samuel Ajala:

Wow. That's amazing. So, um, I, I, the reason I asked is we, there is a lot of people, uh, where we talk about, um, property investment, commercial, and a lot of people, uh, mention Uh, they don't have any funds to invest, but in actual fact, they have a pension and they have access to assess as well. This is one of the reasons why I asked this question, because it's actually a very common question that comes about, uh, about how, um, individuals can pull their finances together to begin to buy commercial properties. I think one of the things I would do before here is get you to, um, put your details down on where people can get you from, because I know that a lot of our viewers are very. Very interested in this particular area as well. So website emails and what we would have it in, uh, we will have it on our description as well, everything concerning use of that. If anybody needs to get emails, websites or anything else like that, uh, we will get that, um, um, communicated to our audience. Um, The other thing I was going to say is, can you discuss the contribution limits and the tax advantages that come with

Brian Harvey:

it? So, um, the contribution limits are currently 60, 000 per annum per person. So, um, if you've got three directors, uh, all members of the SAS, they can make 60, 000 each per annum per person. Now that money does need to come out of the company profits for this year, because it needs to be offset against the corporation tax. Offset against profits for reasons of corporation tax, I should say. Now you can go back to last year, the year before that, and the year before that. To qualify for that, you need to have had some form of pension during those years, even if you weren't contributing. And you can use up any unused contribution allowances from those years. Last year was also 60, 000, but the year before that was 40, 000 and the year before that was 40, 000 because the contribution allowance changed. Um, in order to do all of that, though, you can't claim any tax back from previous years. It needs to come out of, you need to have profits in this year to be able to use those contribution allowances. So, yes, an individual person could put in maybe 200, 000, as long as there's sufficient profit in the current year to offset that against.

Samuel Ajala:

Fantastic. Um, I, you've mentioned, um, um, investments that can be done. We've focused a lot on commercial properties. Are there any other restrictions that a trustee should be aware? And also the role of a trustee. In fact, my first question, what is the role of a trustee within the SAS and what other investment opportunities outside of commercial properties can one do as well?

Brian Harvey:

Okay. So, um, trustee that the members are also trustees of the scheme and they have a responsibility to the beneficiaries, uh, to make sure that the SAS is operated in a prudent manner and they also, um, have responsibility to make sure that they're doing, uh, you know, due diligence on each of the investments that are being made. Uh, and they're, they're all, they're all responsible. So, um, you can't have a situation where one of the trustees is making a decision to do something without the agreements of the others. Now, sometimes you have a professional trustee as well, um, and in that case, they, they also have to sign off all the investments. Can

Samuel Ajala:

a trustee can also be somebody outside of those that are actually doing the investments together? So three friends come together, they do the investment by default, all three of them are going to be trustees.

Brian Harvey:

It's okay. Yeah. The member

Samuel Ajala:

trustees of the scheme. Yes. You're Okay. And, and they can also have members beyond that who are also trustees that are not actually part of those taken at the investment. Is that correct?

Brian Harvey:

They can have a professional trustee. So some administrators also provide a professional trustee. Um, what you will find though, Samuel is most in most cases when they're making that investment, the professional trustee will ask the member trustees to sign a waiver. And the reason for that of course, is that the professional trustees are not property experts. They can't, you know, they're generally speaking their property, their pensions people, and they can't really comment on whether, you know, a particular investment in a commercial property is, is, is a good investment. They, that's not their expertise, but they do have to agree to each investment and they, you know, the role of the administrator and professional trustees is to make sure that the, uh, that the pen pension is operated in a compliant way and doesn't break any of HMRC rules. Fantastic. Um,

Samuel Ajala:

my, my next question now would probably be around, um, the pros and the cons of investing for a SAS, uh, compared to the advantages compared to other investment options. Um, just the pros and the cons really.

Brian Harvey:

Okay. Okay. So let me give you an example, um, where I could have bought, I owned a small hotel in my SAS. And it's commercial property. It was, uh, you know, it was an investment that SAS was able to make. And by buying it in my SAS, it also meant that the SAS would pay for any refurbishment work. Now I could have also bought that property in my limited company by borrowing the money from the SAS. It was within the limits that I could have done that. I, you know, it was less than 50 percent of the value of my SAS. And you're allowed to borrow up to 50 percent of the value of the SAS into your limited company. Um, I could have done that. The pros and cons in that situation, if I bought it in the limited company, the limited company can make, um, it can make a claim, um, what's, um, capital allowance claim. So if people listening know what a capital allowance claim is, it's a claim against future tax, um, for the cost of the, uh, equipment and fixtures and so on that have been installed in property, um, to, to make it, give it the commercial use that it's used for. Yeah. And in the case of a hotel, it can be quite substantial. Um, now a SAS can't make a capital allowance claim because it's not a taxpayer. So it can't claim against future tax because it isn't going to pay any. So the pros and cons, I had to make a decision. Do I buy it in a limited company with a loan from the SAS and then I can make a capital allowance claim or do I buy it in the SAS where it can't make a capital allowance claim, but then the SAS will pay for the refurbishment. So I had to, a decision to make now, I would say that's something I'm not by any means a capital allowance expert, but it's something to think about when you're buying commercial property. And I've actually seen people do it where they buy it in the limited company initially, then they make the capital allowance claim and then subsequently sell it to the SAS. Um, so yeah, there's, there's pros and cons of all the different ways of investing, and there's also people who would tell you that, you know, commercial property is not their thing and they'll invest in the stock market. They'll invest maybe in unlisted shares of companies as well, which a SAS can do.

Samuel Ajala:

Yeah.

Brian Harvey:

Um, in some administrators will let you invest in crypto and Forex and so on, but we're, we're very careful about that. We think that'd be too risky for our investors. Um, but yeah, options, trading and things like that. So there's a whole host of things you can do with a SAS. Um, and of course you can lend it to third parties as well, given the right security. You can lend it, did you say? Yeah, the SAS, the SAS can, can lend to third parties, like angel lending, you know, like people in the property industry will talk about angel lending.

Samuel Ajala:

Yeah.

Brian Harvey:

So it's like, it's like doing angel lending, but it's coming from the SAS.

Samuel Ajala:

Fantastic. I'm going to answer, um, just deviate very slightly. You mentioned, um, properties commercial. Obviously, uh, the SAS doesn't relate to residential, uh, properties, developments and, and things like that. And that also includes developments as well, right? Yes, it's even development of residential. Is there a line crosses between being commercial and

Brian Harvey:

residential? So there are various times when people question whether something is, you know, fully commercial or not. Um, when I bought my small hotel, it did have a room at the back, which was used as an office and an en suite bathroom, it was considered to be owner's accommodation and therefore it had a council tax bill. So on a case by case basis, I would always run those past your administrator, even, you know, even with my experience of SAS, when I bought that property, I had to go to the technical team and say, is this okay? And they deemed that it was and it was fine. Um, there's other things people say, can we have service accommodation? Well, no service accommodation generally is residential. Um, you can have certain types of residential property if it's used in a care format. So, you know, children's homes, old people's homes, homes for former addicts, homes for people from the services background where they've got PTSD, maybe. I've seen all these examples. Um, but there has to be an element of care provided, uh, on the, On the premises for it to be compliant. Um, so yeah, there's, there's, there's, there's certain areas that you have to look at in detail to make sure it's, uh, it's compliant,

Samuel Ajala:

you know, I ask you to, uh, share some success stories and I think that, uh, even in your success stories, one of the things I will ask you honestly, is SAS is specific to commercial. But if all things being equal, what would be your ideal property strategy in 2024? Um, I was speaking to John Howard, um, uh, previously from Property Elevator. I'm not sure if you know John Howard. No. And, um, he, he actually had a lot to say about different strategies that are now available. So I wanted to get your thoughts. All things being equal, SAS wasn't only limited to, um, uh, to commercial units. What would be your, uh, strategy for, uh, 2024 in terms of property?

Brian Harvey:

Okay, so I have to bear in mind that I'm more of a SAS pension consultant than a commercial property guru. There are people that I would refer to if I wanted to answer that question. Um, I really like the commercial multiple occupancy model that I mentioned before, where, you know, the SAS owns the property and, um, you take out a lease in your operating company and you use the property to generate, uh, income from flexible office space, a parts hotel. canteen, um, gymnasium, et cetera. Now, if I wanted to do that, there are other people I would refer to as the experts in it. Um, so, you know, there, there are people I can, I can recommend in that case. Um, I've also seen people do commercial to residential. Um, using a SAS and there's a way of doing it. You can, if you've got a commercial property or SAS, you can use the SAS forms to start doing a conversion to residential, uh, but you have to actually sell it to a limited company or elsewhere before it becomes habitable. And that usually means that people don't put the bathrooms in, for example. Um, and then, you know, they, they, uh, at that point they use a specialist bridging loan to, um, To purchase it from the SAS, and they, they complete the conversion and refinance it. And in that case, what you've done is you've used the SAS funds legitimately to add value to a property that that ends up in your limited company. So the income for that then of course is accessible to you long before pension age. Um, what else would I say in terms of commercial property? Uh, I mentioned the project I did earlier where I ended up with the six nice units. Now, of course they were, they were retail units and I wouldn't necessarily recommend that to people. Um, I didn't need to refinance them because the SAS owned them a hundred percent. Okay. Well, if I tried to refinance them, um, refinancing retail units is quite tricky. They, they want you to have long leases in place, maybe seven years. And the lenders also want to see a good covenants on the actual, um, on the actual people who are your new tenants, um, you know, rather than being maybe a hairdressers and a vape shop and so on. And they're looking for, you know, McDonald's or Betfred. So, um, yeah, that's, that's a challenge with that wouldn't necessarily go for shops. What I do see working well at the moment is industrial units, um, storage units. Um, and of course the multiple occupancy, which I really do like.

Samuel Ajala:

Fantastic. Uh, in terms of, um, storage units, who would be the occupiers? Who would be, uh, those that would be leasing or renting it off you?

Brian Harvey:

Um, it's, it's very often, um, tradesmen who need somewhere to lock up, you know, tools and equipment. Uh, and very often the storage units I'm talking about are just trailers on pieces of land. I've seen people doing maybe the commercial multiple occupancy model that I mentioned earlier, but they've got spare land to the side and they get some, uh, they get some trailers and make use of those and they get a good return on them. Fantastic.

Samuel Ajala:

So what do you think the future is like for, um, shopfront businesses? Uh, as commercial units, I think you mentioned just a moment ago that that's not what you prefer. You prefer not to do that, uh, but what do you think the future looks like for somebody shop for commercial units?

Brian Harvey:

I did it and it was fine Um, and I guess one of the things that concerned me was um because of the You know, the size of the investment. It was ended up with being one row of six units all on the same street. Um, it wasn't very well diversified and that really hit home to me when COVID started. We had the lockdown, all the shops closed. I started to think, well, that 40, 000 pounds a year I've got coming in in rent. Might disappear. Um, unfortunately it didn't because they all got grants and they never missed the payments, but it did make me think about, you know, how to diversify my portfolio going on from that. Um, so I wouldn't say, I wouldn't say this, you know, no future. I'm not someone who can, you know, talk about the economy to a level I'd say there's no future in retail units. I would just be careful not to, uh, not to be too reliant on it.

Samuel Ajala:

Fantastic. Uh, so. That leads me to my next question, which is quite similar, is that what are your thoughts on the current commercial property market? Uh, any trends to look out for? Uh, any patterns, especially for somebody that wants to do this for the first time?

Brian Harvey:

Okay, um, if you're doing it for the first time, so here's an important question that I always ask some people. I'm always looking at If someone wants to set up a SaaS, what are their objectives? How old are they is an important factor as to what strategies they're going to use. But also, what are their skills, experiences, and appetite? Because for example, I have, um, I have clients, um, I've got accountants, for example, who are using their SaaS to buy the office they work from. Um, that's a perfectly sound investment. They're going to pay rent into their own pension scheme in the future instead of paying to a That's a fairly passive investment over a period of 10 years, they'll, the SAS will probably get all of the money back that it spent on buying the building in rental income. So looking forward 10 years, it now still owns the building, it's had all its money back, and hopefully the building's got a p value. But that person's not actively tried to grow their business using their SAS. They, there's a passive investment for somebody who needs to buy their own property. Um, I've got, um, clients who are farmers and this is a great model. So they have, um, a lot of commercial property that they own in their limited company. Um, in their SAS, they've, uh, transferred some pensions in there, but they're also, because they're quite profitable, they're making the maximum contributions every year. So, you know, four people probably put in 60, 000 pounds a year, each into the SAS. They're not paying corporation tax on that money. Now, as soon as the money hits the SAS, they use the SAS to then buy one of their own commercial properties from their own limited company and put it into the SAS. And the money goes straight back to their business, which has highly seasonal cashflow and really needs the cash. So now they've got the property in the pension scheme, they're paying rent to the pension scheme for their business, which is also tax deductible. And over the course of their, you know, coming years, they will try and move all of their property into the SAS so that when they want to retire and sell their business, that farming business is easier to sell when it doesn't own all of the property. And they'll continue to receive rent from the new owners into their pension going forwards. That's a really good use of a SAS. In terms of commercial trends, I think I've already mentioned them. I see, you know, people doing well with, uh, industrial, Um, commercial multiple occupancy. I'm seeing a lot now. Um, probably less so shops.

Samuel Ajala:

So when you say commercial, you mean like proper, um, office blocks?

Brian Harvey:

Yeah, so the commercial occupancy ones I've seen, uh, some of them are buildings in maybe, uh, a business park. Um, others have been, um, like maybe an old mill in the middle of a town centre. Okay. There's a guy, there's a guy who does a very good podcast, um, Scottish guy called Gerry Alexander, and he specialises in this. So he's worth looking up. So, um, you visit those buildings, they're being used, as I say, there might be an apart hotel, there might be flexible office space, canteen, gym, um, and so they're commercial buildings, but they're not shops. A lot of people jump straight to the idea of shops when they think of commercial and they think, oh, I don't want to own shops, but there's lots of other types of commercial buildings.

Samuel Ajala:

Yeah, yeah, fantastic. And I'll say to ask as well. Um, what is your advice for somebody that's, um, undertaking this for the first time? Now, I know I asked a similar question before, but more so around mindset, because I'm sure everything you've said to me right now is a win, win, win, win. I can't even see where any of the folks, but I'm sure that Even though you've presented it to people, it's a win win. People don't get over this mindset of it must be a trap. There must be some kind of issues in the long run. I'm don't, I'm not prepared to take that risk with the money that I've built up in my whole career through my pensions and so on and so forth. How do you overcome those objections?

Brian Harvey:

So Um, to be honest with you, to be really honest with you, I wouldn't try and overcome those objections. SAS isn't right for everybody. And I never try and sell it to people.

Samuel Ajala:

Yeah.

Brian Harvey:

Um, it's more a case of wanting them to know, you know, that I'm available if they are the right person for a SAS. Um, there is an important mindset thing. If you, if you take somebody who's just been on a property training course. And they set up a SAS and they move half a million pounds in there. All of their careers, that half a million pounds has been building in their pension pot has been looked after by somebody else. All of a sudden they've got to make the decisions on how to invest it. And it's a little bit of a rabbit in the headlights moment sometimes.

Samuel Ajala:

Yes.

Brian Harvey:

So what you're really looking for is properly established owner managed businesses, people who really are business people and know what their, what their plan is going to be and how they're going to add value. So yes, I wouldn't try and overcome those objections. If it's not right for someone, it's really not right.

Samuel Ajala:

Fantastic. I really appreciate that. And also, in terms of SAS, what other resources, books, websites would you recommend? for, for some of our viewers in order to gain more knowledge. I think sometimes some of, um, people's fears really is because of lack of information, uh, where they get confidence with the more information they know. So any of our viewers wanted to read up more and get more information about this, where can they possibly find more information?

Brian Harvey:

Okay. So, so I'd start by saying that, uh, our website, I work for retirement capital, where SAS administrator, our website is www dot. retirement. capital. There's no co or uk on the end or anything like that. Um, we have a resources page that can tell you a lot. There are books on the subject. Uh, Mark, Mark Stokes wrote a book about SAS pensions, but I'd say the most important thing to do if you want to understand SAS and what people are doing with it is go to, um, a local networking meeting. There's meetings all over the country. There's, I worked out from the top, there's SAS Scotland, there's SAS Northwest, there's SAS Leeds. SAS Birmingham, SAS Dragons in South Wales, SAS Southwest, there's a couple in South, SAS London, and then there's, you know, the SAS Experience Network, which isn't geographically based. Now, all of these groups have got, if you go to these meetings, you'll find, you know, half the SAS and are deploying it, and the other half are interested in SAS. Some people are looking for joint ventures. Some people are looking for investment opportunities. Those, those meetings which run, you know, monthly or every two months in some cases are an absolute goldmine of information. Um, that you'll learn more from those meetings than you will from probably reading a book or looking on web. Because you'll see real stories of what people are doing.

Samuel Ajala:

Fantastic. Um, I have another question for you, actually. It just may, uh, be somewhat controversial.

Brian Harvey:

Okay. Where has it ever gone wrong for you? So the thing that does go wrong for people sometimes, and I'll be really upfront with you about this, cause I think it's really important. Um, when people do third party lending, the rules that HMRC impose about security I'm not necessarily going to protect people from themselves. When you lend to your own limited company, they're also very strict on security. When you lend to a third party, it says it needs to be commercial, prudent, and secure, and you could argue the word prudent, which means you've got acting in the interests of the pension scheme means that you should be looking for good security. There's nothing specific in those rules about what that security should be. Now at retirement capital, because what we've seen happen in the past, we do impose quite a strict rule ourselves about having to have very good security for third party lending, but there's been cases where people have lent money to, um, quite large companies in some cases. And there have been well publicized, uh, failures where people have lost, lost money from, uh, from third party lending. So it's always important to think the first thing you want to do is make sure you get your return of your investment before you start thinking about the return on the investment. You want to make sure you'd be getting your money back. So there's plenty of opportunities if you want to do third party lending to get a first charge on a property or, and a lot of people don't realize this, you can get a shared first charge. By doing a syndicated loan with other SaaS investors or other angel lenders. Oh wow. Where you're sharing first charge, which is much, much better than having a second charge. You mentioned third party lending. Could you just elaborate on that a bit? Yeah, so there's two types of lending from a SaaS. Lending to your own limited company or lending to unconnected parties, third parties. So I could lend money to you from my SAS, for example, for a property investment that you're doing. What I'm saying is that HMRC's rules for that don't protect me very well if something happens to your project. So we impose further rules on top and say, look, it's, it's, it's better for you to, better for me to make sure that when I lend you that money, I've got maybe a first legal charge over the property that you're working with. Fantastic. Is it common within the industry

Samuel Ajala:

for people to have, um, create like a fund, right? So you have, uh, a property guru, property developer, uh, advising people to invest in his pot, in his fund through their SAS pension. And I believe this is an example of a third party Uh, that you discussed just now, and he's inviting people to invest into his fund. He now, he now invest those funds successfully and then give with, um, give those who had actually invested returns on their, on their investment. Is that something that's quite common within the industry?

Brian Harvey:

Are you talking about when you say fund, you mean somebody investing in stocks and shares through their own fund? Is that what you mean?

Samuel Ajala:

No, somebody who's, um, into commercial property. Okay. And he, he has had a conversation with five different people. Yes. So encouraging them to set up a SAS so that it will pour it into he's, it may not be he's, it may be shared, uh, but ultimately he's going to be the one responsible for the investment of all five people and give them terms of when to expect returns on the investment.

Brian Harvey:

Yeah, so this is what, this is what these unconnected party loans are for.

Samuel Ajala:

Yeah.

Brian Harvey:

So it's, it's usually, um, people lending into a property project and when it's more than one person, we usually set it up as a syndicated loan. And we've done that even where, you know, people might have SASEs with different administrators. So it might be that a couple of them have retirement capital and then there's one or two in other administrators, but we're able to work with the other administrators usually to make sure we can set up a syndicated loan that has very good security, secured against the project or the property that the loan is for. And, um, As I say in, in, in our case, in retirement capital's case, we do insist on very good security for those loans because they can go badly wrong.

Samuel Ajala:

Fantastic. Uh, if one of my viewers came to you, Brian, I said, uh, I've got a pension. I want to transfer, open up a sash transfer into assess and begin to invest. Are you able to assist them right the way through the journey?

Brian Harvey:

Yeah, we do the whole thing from the beginning of, you know, understanding what they're trying to achieve, um, doing their application process with HMRC for them, um, helping to set up the bank account and then transferring other pensions in. Um, and, you know, I speak to my clients, um, certainly in the early days, once a month whilst they're getting to the point where they've deployed their funds and then as often as they want me to after that. It's making sure, but it's really important to me at the beginning to understand what they're trying to achieve, because what I don't want to see is someone setting up a SAS and then saying, right, I've got a SAS now. What should I do with it? And you do see this on Facebook. You'll see people saying, I've just set my SAS up. I'm wondering what to do. That's the wrong way around. You should have an objective when you're starting before you set the SAS up. Cause like I say, it's not right for everybody. It shouldn't be just something you buy off shelf. It needs to be thought through and there needs to be, uh, a strategy that's based on their objectives and their age and their appetite and their experience.

Samuel Ajala:

Fantastic. Uh, and, and before we round up as well, do you have any, uh, last thoughts, uh, wisdom for our viewers? Um, um, yeah, just some of you from your experience, some thoughts, some wisdom. And that you can put to some of our viewers before we end.

Brian Harvey:

Well, that's an interesting question. I have to delve back into everything interesting in my head to get to answer that. Um, yeah, I think, I think the important thing here is you've got to make sure you're going to get a good return. We do a thing, um, called a SAS Lite and SAS Lite. It's still a SAS. is concerned, you've applied for SAS and you've set it up. What we're doing with a SAS Lite is making it affordable for people who are starting with a small pot. But by doing that, we restrict what they do to keep our admin costs down. So they can only invest in stocks and shares whilst they've only got a small amount. Yeah. Whilst growing it. Now there's only any point doing that if your company is going to make sufficient profits in the coming years to make the contributions that will offset your corporation tax to grow the pot to a suitable size. So last week I had somebody starting asking me if they could start a satellite. Um, they didn't have a good contribution strategy in place. They were going to start with 20, 000 pounds. Now, the 20, 000 pounds. If you invest it in the stock market, let's say it makes 10 percent if it does well. So it's made 2000 pounds. The cost of running the SAS means that that isn't worthwhile and it's not, it's not sensible for them to do that. So you've got to have, you know, you've got to think through your whole contribution strategy, whether you've got other pensions to bring in, what you're trying to achieve, how old you are, all of those things, it's important, but it is a case by case basis. So what I'd say to people is. I get lots of discovery calls with people. Who, you know, are not yet ready for a SAS who are not, um, you know, don't get qualified for a SAS. Maybe they haven't got a limited company in place yet, or maybe it's not been trading for long enough. Um, but there's no harm in having a chat and I'm always happy to talk to people and see whether it suits them.

Samuel Ajala:

Fantastic. Brian, you are an absolute legend. Uh, thank you for your, for your wisdom, your expertise, uh, on this particular subject, and For the rest of us that are listening, please, the details of Brian, uh, will be down in the description. Uh, please reach out to him. I think that, uh, this is a, uh, relevant platform that should be utilized if, uh, it's suitable for you. Uh, this SAS pension and investment into commercial units. Uh, once again, Brian, uh, I really want to thank you for your time. And we shall speak soon. You take care, Brian.

Brian Harvey:

Bye bye.