This could otherwise lead to distortion in the market both in terms of the need to hold capital but also in how pricing of UK commercial property business might evolve in the future.
Mission impossible
So how important is this 30-day period and how easy is it to achieve? Let us first explore the likely options that might occur in the event of the need for an orderly wind up.
The first option is a block transfer of the Sipp operator’s business as would occur in a sale or merger. One option here is the purchase by the new operator of the winding up Sipp’s trustee company. In this event, the trust company in whose name the property is most likely registered is simply absorbed into the new business and no physical transfer of title is required. It would seem in this instance that the 30-day rule would be irrelevant.
The alternative is physical transfer of title of the property between the old and new Sipp operators’ trustee companies. Some commentators have questioned why the 30-day period should remain as such while calendar timescales may be part of the equation, surely it is the hourly time actually taken and thus the cost to the Sipp operator of the transfer that is important. Where a block book of business is being transferred, when would the 30-day period be deemed as commencing? It is logical to assume that the process would be managed over a period of weeks or months and thus quite possibly each property would have its own staged start date.
So what factors need to be considered in determining if a property can be transferred in the 30-day period?
Outright ownership
If a freehold or long leasehold UK commercial property is held unencumbered by mortgage and without rental debt, the process required to transfer the property includes suitable due diligence of the property by the receiving scheme, suitable due diligence of the new provider by the holding Sipp operator, appointment of conveyancing solicitors and the completion of a TR1 transfer of property form.
Notification should then be made to interested parties such as the tenant to confirm the new account into which rental payments should be made – and from what date – and to whom contact should be made in respect of the new landlord.
Although there are still several parties involved in this process, providing all parties are willing and can operate to respectable turnaround times, the transfer of a property should be achievable within 30 days. Where the property might be part of a block book of business this should be even more achievable as saving of time through economy of numbers might be possible. Additional efficiencies such as using the same solicitor for all cases might also streamline the process.
