A bespoke base for the business

Buying off-plan premises with a neat tax wrapper makes very sound commercial sense, says Christopher Browne

The six-storey HQ of consulting engineers Nick Till and Peter Banyard is even more futuristic than the Gherkin - it hasn't been built yet. For the pair are buying the building off-plan. "We're really excited about it," Till says. "Moving into your own brand-new premises is the best thing a business can do." The two partners will relocate to the new base in Godalming, Surrey, in October 2004.

The partners, who own several construction and environmental support companies, currently have a staff of 50 in two offices just over 60 miles apart. "We are expanding," Till, 40, says, "and although we have several different interests, it's much better if they're all in the same place - as it improves the our day-to-day running, communications and overheads."

Buying a tailor-made HQ is an unusual step for a company - unless, of course, it is a multinational corporation with considerable resources. Most businesses opt for custom-made offices rather than bespoke so they don't have to re-invest their profits or raise sizeable loans to buy.

Till and Banyard dipped into their Sipps (Self-Invested Private Pension Schemes) to raise the 28 per cent deposit on their £340,000 project. "As we are in the building industry, we know the merits of designing your own office premises instead of renting or buying someone else's," says Till.

Until recently, traditional British reserve made off-plan off limits to the average buyer as he or she was reluctant to pay for a new project sight unseen. Then the popularity of French, Portuguese and Spanish pre-builds changed all that and people started buying off-plan in the UK's larger towns and cities, often gaining discounts when their deposits helped fund the building work.

The two consulting engineers won't be able to use such nifty footwork, however, because they're buying to order, not from a multi-unit development. "We've had a bit of a bonus as we've managed to pay last year's price instead of this year's for the building," says Till. And it will remain so throughout the project. It could spell sizeable capital growth for them, too - one of the bonuses of off-plan investment.

One of the down sides is missed deadlines, but even so it's unlikely Banyard and Till's new build will miss its completion date since they have inserted a penalty clause into their contract. For every month the building is unfinished, the builders must pay the mortgage instalments on it.

The two businessmen will use their own building knowledge to add some special effects. Among them will be under-floor boxes for all IT and computer links, fluorescent lighting and air-conditioning - features their companies have already added to such developments as Tate Modern, the HQ5 offices of lawyers Clifford Chance at London's Canary Wharf, the British Museum, Heathrow Airport and the MI6 building in Vauxhall Cross, London.

After raising their deposit, Banyard and Till approached Surrey broker Rod Milne, of Milbourne Financial Services, who got them a commercial mortgage from Standard Life. The Godalming HQ will have a 10-year lease - the same term as the loan. After that it will be owned by the two Sipps - handy tax wrappers as the partners won't pay income tax on capital growth or capital gains tax should they sell.

If your business is expanding or you are planning to relocate, you'd better hurry if you want to use a Sipps. From 5 April, 2006, the Government plans to raise the Sipps' 25 per cent threshold for commercial buying to 50 per cent. So to buy a £500,000 shop you will need a £250,000 Sipps for your deposit, plus a matching loan, as opposed to the £125,000 currently needed. "If this had been April 2006, Nick Till and Paul Banyard simply wouldn't have been able to afford to buy their Godalming HQ," Rod Milne said.

Milbourne Financial Services: 020-8949 7979; www.milbourne.co.uk;

For a list of Sipps providers, visit www.sipp-provider-group.org.uk

For a guide to Sipps property investment, visit www.ajbell.co.uk