City Trustees - part of Mattioli Woods

News and Media

10 November 2014

Pensions Perspective: can I buy property at auction to put into my pension scheme?

We assume that you mean can the pension scheme purchase a property at auction? Yes, provided that the property is commercial.

Purchasing at auction can be an exciting venture; however, you should be aware that the purchase price is always unknown. As with all proposed investments, we, as your pension provider, would need to make sure that there is sufficient liquidity in your scheme to go ahead. You will be representing the scheme on the day of the auction and before you can start bidding, you will need to be aware of the maximum price the scheme can pay.

With a normal property purchase, the deposit is usually paid upon exchange of contracts. But at auction we won't know what the eventual purchase price will be (and therefore the required deposit) until the bidding is completed. In addition, if the bid is successful, the deposit will need to be paid immediately. There are usually two ways this can be done:


1) Presenting a cheque to the auction house

There are risks involved with handing over a blank cheque. To mitigate these risks we, as provider, would put a control measure in place to ensure the cheque isn't cleared by the bank without first contacting us.

2) Depositing funds with a solicitor prior to the auction

There are instances where an auction house will accept a solicitor's letter confirming that they hold sufficient funds from the scheme on their client account to cover the deposit. You would need to take this letter with you to the auction as proof of funds for any deposit.

If the bid is successful, and the deposit has been paid, then we proceed as with any other property purchase.

Buying at auction requires planning in advance, and so a spontaneous trip to the auction house is to be avoided! Anyone who has watched Homes under the Hammer will know that auction house fees can apply if the deposit is not paid immediately; furthermore, if completion isn't within the required time frame, the deposit may be lost.

Also, be aware that if you were to purchase the property at auction and then subsequently decide to sell it to the pension scheme, you are a connected party and connected party rules will apply.

Pension Perspective is a weekly feature from City Trustees, covering questions that our experienced sales and technical teams have received from advisers. The Q&A covers a range of subjects including property, pension contributions, protection, auto-enrolment and more.

City Trustees operates a free technical helpline for advisers for support with pension challenges. Tel: 0116 240 8731 or email:


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City Trustees is a trading name of Mattioli Woods plc. For news updates on the Group, please visit our central News & Media on the Group website.