Environmental considerations for SIPP and SSAS trustees in property transactions

In this update, we look at some of the environmental issues surrounding property acquisitions and management – and why they are of particular relevance for trustees of pension schemes that invest in property.

Land contamination

Land contamination may arise as a result of past or present contaminative uses on-site (or on nearby land) – such as industrial, landfill, chemical processing and quarrying.

If a local authority determines that land is contaminated (posing a possibility of significant harm to humans or the environment) and the party that caused the contamination cannot be found, trustees (as the current owner of the land) may be required to remedy the contamination.


The Control of Asbestos at Work Regulations 2012 impose obligations on the 'dutyholder' to undertake an assessment of whether asbestos is present in the premises and keep a written record detailing how the asbestos is going to be contained, removed or otherwise dealt with.

As landlord of commercial premises, pension trustees can be the dutyholder in certain cases.

Failure to comply with the dutyholder's obligations in relation to asbestos is a criminal offence and a conviction can lead to fine or imprisonment.

Japanese knotweed

Japanese knotweed is an invasive plant that can cause damage to buildings and structures by growing through weak points such as cracks in masonry and tarmac.

Where property is held as a pension scheme investment and the trustees, as legal owner, allow knotweed to spread onto neighbouring property, they may be ordered to pay compensation to the neighbour to cover the costs of removal of the knotweed or any loss in value of the neighbour's property.

Environmental authorities can also impose species control orders requiring the owner of affected land to undertake operations to control the knotweed. Failure by an owner to comply with such an order can amount to a criminal offence.

Implications for SIPP and SSAS trustees

  • Whereas SIPP and SSAS trustees commonly ring-fence contractual liabilities to the extent of the assets in the particular pension fund, statutory liabilities cannot be limited or excluded.
  • Land value will be potentially affected by the existence of contamination, Japanese knotweed or asbestos. These should be specifically taken into account when valuations are being carried out.
  • Trustees could face personal liability to comply with remediation notices or other enforcement notices served by the local authority or other environmental enforcement agencies.
  • If there aren't sufficient funds in the pension scheme to meet liabilities and the member is not in a position to make further contributions, the enforcing authority may take steps to obtain a charging order over the trustees' other assets.
  • There could be great reputational risk if a pension provider or professional trustee is in the news for failing to comply with statutory duties that resulted in harm to human health or the environment.

How to manage the risk

A professional trustee of a SIPP or SSAS can manage the risk of potential liability in relation to an investment in property in a number of ways:

Due diligence

A trustee can mitigate potential liability by undertaking careful due diligence before the property is acquired by the pension scheme.  A professional trustee should:

  • Obtain a desktop screening report, which is a risk analysis of a property. 'Further action' reports can be explored and indemnity insurance obtained if appropriate.
  • Ensure that asbestos surveys and management plans are in place and kept up to date.
  • Consider requiring a specialist firm to be instructed by the pension scheme to survey properties for Japanese knotweed and make sure the valuer is aware of the results.

Trustee duties

  • Trustees have duties under trust law, including to obtain professional advice in an area requiring specialist knowledge and to take reasonable skill and care. These are relevant when making an investment decision.
  • A trustee's liability to take care in making investment decisions cannot be excluded by the trust deed and rules governing the SIPP or SSAS.
  • A professional trustee should be able to demonstrate that appropriate due diligence was carried out on a property investment and taken into account in exercising its investment power. This will go some way to protect it from liability.
  • Trustees of a SSAS have a statutory obligation to obtain and consider 'proper advice' before making an investment decision. This advice must be in writing from someone whom the trustees reasonably believe is qualified and experienced in financial matters and has appropriate knowledge and experience of pension scheme investments.
  • A professional trustee should take steps to ensure that such advice is obtained. This ensures some professional oversight as to whether a property investment is suitable and provides some protection for the trustees.

Legal title to the property

  • In the case of a SSAS, it is possible to exclude the professional trustee from the legal title (with the individual co-trustees only being referred to) and for the professional trustee’s interest to be protected by the entry of a title restriction preventing dispositions of the property without its consent. In this way, the professional trustee is not exposed to the potential statutory liabilities that can be imposed on a legal owner of the property.

Trust deed and rules

  • The trust deed and rules governing a SIPP or SSAS may contain an indemnity clause providing for any liability of the professional trustee in relation to the property to be met from the scheme assets or for the member or (in the case of a SSAS) employer to be responsible for the liability. Such an indemnity will not operate, however, if a trustee has been fraudulent or reckless or if there has been a deliberate breach of trust.
  • The trust deed and rules may give a professional trustee powers to act unilaterally where a property investment gives rise to a potential liability, including to dispose of the property to meet any liability or to instruct remedial works to be carried out with the cost being met from scheme assets.


If you would like our advice on how you can manage your risk of potential liability or any other SIPP or SSAS property issues, please contact Ed Pitt or Damien Garrould.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.


Date published

07 February 2019


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