Building the baker's pension: Neasa MacErlean reports on a way for the self-employed to invest in their own property

Hundreds of self-employed people, from bakers to barristers, have invested their personal pensions in their own business accommodation.

Salisbury-based Personal Pension Management (PPM), and its parent, Provident Life, are the leading players in the self-investing personal pensions market. For plan- holders who invest more than about pounds 2,500 a year (or pounds 25,000 in a lump sum), PPM will take care of the administration of the pension funds while the plan-holders make the investment decisions.

PPM is increasingly helping professionals and other people to invest in the properties from which they run their own businesses. They include a baker investing in his bakery and firms of solicitors, accountants and architects buying their own offices. One possible project under discussion is the purchase of a mine by a group of miners.

One of the leading firms of Edinburgh architects, Percy Johnson- Marshall and Partners, has recently moved into a listed building, Duddingston House, which was designed by Sir William Chambers, the architect of Somerset House.

Bruce Hare, a senior partner, bought the building through his own self-investing pension plan. The 50-strong firm is now housed under one roof. To get the full tax relief, Mr Hare has to keep his investment for 15 years. 'It was a way of being able to do things efficiently from a pensions point of view and from a tax point of view,' he says. 'I'm not sure why more individuals aren't doing it.'

The Duddingston House scheme is exactly the kind PPM recommends. The firm might have bought the house anyway - even if it had to do it in a less efficient way. Although the property can be expected to appreciate in value over the next 15 years, Mr Hare's livelihood is not totally reliant on this, and his pension has other investments.

By contrast, PPM's operations director Francis Moore is concerned that the mining plan is too speculative. He says: 'The key thing is not to use pension funds as a rescue activity. Otherwise if you buy a bad investment you get double jeopardy.' If the mine did not prove cost-effective the miners would not only lose their present source of income but also their nest egg for the future.

PPM has seen a boom in interest so far this year. The partners in an accountancy firm have clubbed their funds together to buy a pounds 4m building. Now that they are able to practise outside the Inns of Court, sets of barristers are also thinking about buying their own offices.

About 15 per cent of the funds administered by PPM are invested in property. Charges for setting up and running a scheme with the company are pounds 750 in the first year and pounds 375 a year afterwards. There are also charges for switching investments - pounds 9 for each stock market transaction, for example.

Francis Moore expects more and more plan-holders to invest in property while property prices are low. 'The opportunities on the property side are very attractive. And we can move very, very quickly to secure good buys.'

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