Sipps

[Time to Emigrate]

Im just wondering how the SIPPS due next April will affect the current property market

Any ideas???

[since the beginning]

My idea is do a search. Believe it or not it has been discussed.

[Bearing Up]

Im just wondering how the SIPPS due next April will affect the current property market

Any ideas???

<{POST_SNAPBACK}>

Quick, remove this thread before ZZZQ sees it - he'll blow his nut

[brainclamp]

Quick, remove this thread before ZZZQ sees it - he'll blow his nut 

<{POST_SNAPBACK}>

You are talking abour the very rich income earners being able to purchase property for 40% off. Property yielding just 5% will become 8% overnight to these select investors.

If your not an investor then you can take advantage of the varoius government schemes which involve part ownership part rent or some other form of cobblers.

Price of a UK passport:

1997 2005

£19 £41 up 100%

Price of a Pint of Beer:

1997 2005

£1.60 £2.50 up 50%

Council Taxes

1997 2005

£750 £1250 up 70%

You exist to pay rents and taxation. Both of which are set to rise.

[DoubleBubbleTrouble]

You are talking abour the very rich income earners being able to purchase property for 40% off. Property yielding just 5% will become 8% overnight to these select investors.

<{POST_SNAPBACK}>

Wrong wrong wrong wrong wrong wrong WRONG!

Pension's (such as SIPP's) are not tax free... they are a tax deferral mechanism.

You don't pay income tax/cap gains during the lifetime of the pension but once you retire that money has to come out of the pension. You then pay tax on that money (in the form of income tax on your annuity). So the tax has just been deferred.

Edited June 16, 2005 by DoubleBubbleTrouble

[Time to Emigrate]

Wrong wrong wrong wrong wrong wrong WRONG!

Pension's (such as SIPP's) are not tax free... they are a tax deferral mechanism.

You don't pay income tax/cap gains during the lifetime of the pension but once you retire that money has to come out of the pension. You then pay tax on that money (in the form of income tax on your annuity). So the tax has just been deferred.

<{POST_SNAPBACK}>

thx for the Info

[Cityfool]

Wrong wrong wrong wrong wrong wrong WRONG!

Pension's (such as SIPP's) are not tax free... they are a tax deferral mechanism.

You don't pay income tax/cap gains during the lifetime of the pension but once you retire that money has to come out of the pension. You then pay tax on that money (in the form of income tax on your annuity). So the tax has just been deferred.

<{POST_SNAPBACK}>

True up to a point except that you are allowed to take portion of fund tax free as a lump sum on retirement which makes it tax free and the tax you pay on the annuity income is likely to be lower (as some of it will be taxed at lower rate) than if you paid the tax now when all of it (for most of these people) will be higher rate. There is no getting away from it this is an extremely generous tax break for high earners who want to invest in property. To what extent that tax tail will wag the investment dog remains to be seen and I personally think the impact on the market will be fairly small but there is little doubt there will be some supporting effect from it.

CF

[Killer Bunny]

Im just wondering how the SIPPS due next April will affect the current property market

Any ideas???

<{POST_SNAPBACK}>

[Red Baron]

SIPPs will barely ripple the surface of the property market.

Anyone who has sufficient funds (and you need a lot) to purchase a property as part of the scheme is likely to be a sophisticated investor. Such an investor is extremely unlikely to invest in property at the current stage of the cycle now that all the indicators are pointing to accelarating price drops.

[JustYield]

To what extent that tax tail will wag the investment dog remains to be seen

<{POST_SNAPBACK}>

Interesting choice of words, but you win according to the timestamp:

http://www.housepricecrash.co.uk/forum/ind...=133756&st=20

HPC zeitgeist.

JY

[spoon]

SIPPs will barely ripple the surface of the property market.

Anyone who has sufficient funds (and you need a lot) to purchase a property as part of the scheme is likely to be a sophisticated investor. Such an investor is extremely unlikely to invest in property at the current stage of the cycle now that all the indicators are pointing to accelarating price drops.

<{POST_SNAPBACK}>

if you've been waiting for hefty falls in house prices and they come overnight by way of this SIPPS ruling you think people will be all that dissuaded simply because property is expected to fall further? i'm not so sure. that said i don't have a very good grasp of SIPPS.

[FreeFall]

if you've been waiting for hefty falls in house prices and they come overnight by way of this SIPPS ruling you think people will be all that dissuaded simply because property is expected to fall further? i'm not so sure. that said i don't have a very good grasp of SIPPS.

<{POST_SNAPBACK}>

Also a lot of people who earn sufficient to take advantage of this approach are probably high wage earners with professional jobs (and existing company pension contributions). Personally my company pays 9.75% of my salary into a pension fund for me, and I just top it up...

Do you think that this will benefit the self employed most?

[theChuz]

my heart sank when i seen the thread title

[Blind]

Now for our example we are going to buy a £225,000 house. The SIPPS rules say you can only borrow 50% of whats is in pot. Therefore you would need £150,000 in the pot to start with.

Most people contribute a maximum of around 15% of their wages to a pensions and for an example we are gogin to look at someone earning for 15 years. This means you have to contribute 10,000 to the pot every year. At 15% of wages this means you have to be earning £66,666.

How mnay people do you reckon earn over that amount consistantly for 15 years and then want to use 100% of it to buy one property? I'd guess very few.

What is more likely is that companies will spring up from pension funds buying lots of property and then renting it out. You will then buy shares in the company. This would allow a more balanced investment portfolio.

Oh look its not a property investment - its equity.

[brainclamp]

Now for our example we are going to buy a £225,000 house.  The SIPPS rules say you can only borrow 50% of whats is in pot.  Therefore you would need £150,000 in the pot to start with.

Most people contribute a maximum of around 15% of their wages to a pensions and for an example we are gogin to look at someone earning for 15 years.  This means you have to contribute 10,000 to the pot every year.  At 15% of wages this means you have to be earning £66,666.

How mnay people do you reckon earn over that amount consistantly for 15 years and then want to use 100% of it to buy one property?  I'd guess very few.

What is more likely is that companies will spring up from pension funds buying lots of property and then renting it out.  You will then buy shares in the company.  This would allow a more balanced investment portfolio.

Oh look its not a property investment - its equity.

<{POST_SNAPBACK}>

Many would!

By this reckoning crappy dot com companies with no earnings can never achieve valuations greater than BP!

Once you dangle something like this in front of people the crowds will rush in! There are now more millionares than ever before.

Edited June 16, 2005 by brainclamp

[BufferBear Bitcoin Bull]

Quick, remove this thread before ZZZQ sees it - he'll blow his nut 

<{POST_SNAPBACK}>

What....you mean like this?

zzg113 Jun 13 2005, 09:05 PM Post #2

BORING!!!!!!

We've been through SIPPs at great length on this board many times before. Search the board for "SIPPs", and read the threads on them, so we don't have to go over the same ground OVER AND OVER AGAIN.

Edited June 16, 2005 by Buffer Bear

[laurejon]

What is more likely is that companies will spring up from pension funds buying lots of property and then renting it out. You will then buy shares in the company. This would allow a more balanced investment portfolio.

Oh look its not a property investment - its equity.

The salient point here is that Companies will indeed be buying up residential properties, and they are in it for the long term so they dont give two hoots about the best or worst time to buy.

I think the UK will soon become a nation of renters, thats what happens in Europe and I am sure that is what will happen over here.

Take a look around France, Beautifull houses all previously in private ownership and now rented out.

Renting permanently is the only medicine for consistant HP Boom to Busts.

[okonu]

The salient point here is that Companies will indeed be buying up residential properties, and they are in it for the long term so they dont give two hoots about the best or worst time to buy.

I think the UK will soon become a nation of renters, thats what happens in Europe and I am sure that is what will happen over here.

Take a look around France, Beautifull houses all previously in private ownership and now rented out.

Renting permanently is the only medicine for consistant HP Boom to Busts.

<{POST_SNAPBACK}>

- Yes they will care. If they are renting only (not flipping) then they will care very much about the net yield vs long term interest rates, which will drive when it is good or bad to buy. No point borrowing money at 6%, and only earning 5% on it.

As a matter of terminology - those houses in France are still in private ownership - just no longer owner occupied.

[Antsy]

Renting permanently is the only medicine for consistant HP Boom to Busts.

<{POST_SNAPBACK}>

But with rent levels in the UK way above what you would pay in Europe for a similar sized property, it is also a recipe for a massive problem in the future when the ever decreasing ratio of working age people have to shell out for the housing of retirees that still have to pay monthly to keep a roof over their heads and have nothing to sell to pay for their nursing care. I'd like to think this foresight is why the government perversely wants to raise the number of OOs via its various wierd schemes, though I know that really, no government gives much of a monkeys about the long term effects of its current strategies.