Comparing like for like with Sipp charges is tricky as providers often include different services in their headline fees, says Martin Tilley, director of technical services for Dentons Pension Management.
No two property cases are ever alike and thus quoting a fixed fee often means some of the easier cases will subsidise the more complex. Fees will also vary depending on whether it is necessary to register for VAT, if borrowing is required and if the purchase is outright or joint with other parties.
Most firms thus operate a flexible time-based fee model. With his firm, for simple cases, including a leaseback, Mr Tilley says fees should start at around £700 plus VAT and build upwards depending on what else is required.
Ongoing, property management/administration tasks do need to be undertaken and dependent upon Sipp operator involvement could range anywhere from £100 to £400 a year where a building has a single tenant or upwards if the building is multiple tenanted, he adds.
Other professional charges also need to be considered, Gareth James, technical resources manager at AJ Bell, adds.
Solicitor, surveyor and lender fees all add to the cost at outset, and property management fees are potentially going to be an ongoing expense.
Mr James says: “It is important for the Sipp investor to establish whether they have a choice of professionals, or whether they are obliged to use professionals chosen by the Sipp provider as this can have an impact on costs.”
Many providers work on a mixture of time charge basis and fixed fees, says Andy Leggett, head of Sipp business development at Barnett Waddingham.
As some work is relatively predictable fixed fees are possible, he says, but other work can vary significantly.
Mr Leggett says: “Properties vary greatly in complexity. Factors that affect the complexity of the case include the number of investors, whether there will be a mortgage, the number of tenants, issues arising from searches and more.”
It is always best to speak to the Sipp provider and get an estimate of the fees involved for the specific purchase, says Claire Trott, head of technical support of Talbot & Muir.
Fees are likely to be levied in addition for things such as VAT registration, borrowing, leases, etc, says Ms Trott.