Setting up a SIP

[Jer_1974]

Has anyone set up a SIP for a commercial property? I own a shop unit that I want to put into a SIP. I paid for the unit last year but need some money out for a tax bill. Do I need an IFA or could I set one up my self.

[Edinburger]

Jer_1974 said:

Has anyone set up a SIP for a commercial property? I own a shop unit that I want to put into a SIP. I paid for the unit last year but need some money out for a tax bill. Do I need an IFA or could I set one up my self.

It's SIPP. Self Invested Personal Pension. Other pension products are also available which may or may not be better suited to your needs.

Yes, you could set-up a SIPP yourself but I'd recommend you seek advice from an IFA.

[dalenorth]

I know liberty sipp do a low cost sipp, and they accept direct applications from clients too, meaning you save a grand on IFA fees.

[Edinburger]

dalenorth said:

I know liberty sipp do a low cost sipp, and they accept direct applications from clients too, meaning you save a grand on IFA fees.

Not being funny mate, but there are plenty low cost SIPPs available. Saving a grand in IFA fees could cost you a lot more in the long run. That's just my view - advice isn't for everyone. But I could you show you projected benefits and charges which would make your hair curl.

[Newc]

Putting a commercial property into a SIPP wrapper requires a willing provider, a trust ownership structure, and a friendly surveyor. It is not something for the cut-price DIY setups.

OP - there are a few well known providers. Try Alliance Trust, A J Bell, Killik, Standard Life.

[Jer_1974]

Thanks for the advice. I had a meeting with my IFA today all seems good but he was talking about a 4% set-up fee on top of charges which I feel is a bit steep.

[The Leaper]

In my view a simple 4% tells you nothing. What you should ask is

a. What will actions will he be doing regarding thw SIPP?
b. How long will it take to do, expressed in hours?
c. What's the hourly rate?

Then you'll get a good idea of what's involved, how long it'll take, and what is being charged, and then you can make a better informed opinion of the fees.

R.

[ellroy]

Have you got suufficient funds already in a pension scheme to buy, at market value, the unit?

If not good luck, as although a SIPP can borrow up to 50% of the scheme's assets you'll be hard prsssed to find a lender willing to do so for commercial property investment.

You'll also need cash in addition to the purchase price for the SIPP fees, insurance costs and valuation and legal fees.

[Edinburger]

Jer_1974 said:

Thanks for the advice. I had a meeting with my IFA today all seems good but he was talking about a 4% set-up fee on top of charges which I feel is a bit steep.

I think that depends on yoyur circumstances but more so on what you're getting for the 4%. I'd also suggest you speak with a few IFAs (you can usually guage fees from an initial phone call and from some IFAs' websites).

If you PM me with the area you live in, I may be able to give you some recommendations.

[Edinburger]

ellroy said:

Have you got suufficient funds already in a pension scheme to buy, at market value, the unit?

If not good luck, as although a SIPP can borrow up to 50% of the scheme's assets you'll be hard prsssed to find a lender willing to do so for commercial property investment.

You'll also need cash in addition to the purchase price for the SIPP fees, insurance costs and valuation and legal fees.

There are various types of SIPPs and what you say is true for some of them, but not all. This is exactly why the OP needs an IFA. Having said that, a lot of people think they need a SIPP when often another type of pension may be more suitable and may be cheaper than a SIPP. Again, that's why you need an IFA.