Please note some aspects of this are still to be verified.

2.2 Timescales
Purchases involve a number of different tasks and several different parties. Some tasks involve "external" people (e.g. the Seller and the Lender, if any) who may be unfamiliar with the special requirements of a pension scheme purchase.

It is possible for a purchase to be completed in a few weeks but more realistically it could take up to 2 months or more, especially if unforeseen complexities arise. If a loan is involved this often increases the timescales.

Your own Solicitor will be co-ordinating the transaction up to its final stages so if there is a particular urgency you should let him know.

ALL ENQUIRIES AS TO PROGRESS SHOULD BE MADE THROUGH YOUR OWN SOLICITORS.

YOU MUST NOT MAKE ANY COMMITMENTS TO PARTICULAR TIMESCALES WHEN AGREEING HEADS OF TERMS WITH THE SELLER. TARGET EXCHANGE OR COMPLETION DATES MUST BE AGREED WITH OUR OWN SOLICITORS.

2.3 VAT
It may be appropriate for your Fund to be registered for VAT.

L&C Pensions cannot advise you on this or deal with VAT accounting and returns.

Your own accountants may be able to assist you or you may use the services of the Scheme Administrator's own Accountants subject to their normal charges. Some administrative input will also be required by L&C Pensions. The fees will be quoted on request according to the particular circumstances of your property.

If an election for VAT is to be made it is important that action is taken before completion of the purchase.

2.4 Costs
All costs will be paid from your Fund unless you request other arrangements which are acceptable to L&C Pensions. If this applies you should complete the relevant question on the Proposed Property Purchase Form.

Typical costs for the purchase of a property valued at £125,000 might be as follows (These are in addition to the normal SIPP charges and all charges are subject to the addition of VAT):

1 - Survey/valuation fee £ 750 Estimate
2 - Stamp Duty (1%) £1,250 2
3 - Your own Solicitors fees £1,700 Estimate
4 - L&C Pensions Solicitors fees purchase, registration etc £ 950
5 - Estimate lease £ 400 Estimate3 borrowing (if any) £ 400 Estimate
6 - Lender loan arrangement fee £ 700 Estimate
7 - Administration charge for purchase £ 550
8 - Administration charge for new mortgage £ 250

Total required (approximate) £6,700

1 The surveyor and your own solicitor are chosen by you and will confirm their actual charges with you or L&C Pensions own retained surveyors may be used.
2 1% of purchase price for properties between £125,000 to £250,000
3 Actual charges will vary according to the work involved in a particular case.
4 Assumed to be 1% of loan on borrowing of £70,000
5 This is the standard fee currently charged for processing this type of investment. For purchases initiated after this date it will be increased approximately in line with inflation. If a purchase has special features or is particularly complex or protracted L&C Pensions reserve the right to make an additional charge. This would apply, for example, if the property is not single tenanted, if special contamination or other investigations prove necessary or if any developments, improvement or similar work is involved. The charge may also be increased if regulatory or other considerations lead us to alter our procedures.

Once the property has been bought there will be ongoing "servicing" costs which typically could be as follows:

Property management £ 485 pa deducted from your Fund quarterly in arrears*

Administration £ 350 pa deducted from your Fund**(+£100 if borrowing in place)

Insurance £(variable) usually recoverable from the tenant

L&C Pensions reserve the right to make an additional charge if additional work is caused by changes in regulations or the requirements of any external authorities or if exceptional work should arise in a particular case. This would apply, for example if there were any development, improvement or other work undertaken.

These costs are current at the time of publication but may be changed. Current costs will be confirmed upon receipt of completed Proposed Property Purchase forms.

Expenses will arise from time to time in addition to the fees for the fund itself, for example:

Insurance premiums (if these are not recovered from the tenant)
Possible additional inspections by Managing Agents needed as a consequence of an application for consent to alter etc

Other works required in connection with the property
Costs imposed on the owner by external parties, for instance in connection with provision of services, maintenance of roads, etc.
Legal and administration costs associated with any subletting

If there should be insufficient money in the fund to meet these costs and if there are rental voids then L&C Pensions will request that sufficient money be made available by the member. If this is not, or cannot be forthcoming for any reason L&C Pensions may have to instruct the property to be sold.