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EverHopeful

Sipps And Residential Property Investment.

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I am concerned about the impact of the Governments latest house price prop.

The fact that from next April investors with large SIPPS pension funds will be allowed to buy residential property somehow allowing in them a 40% tax dodge.

Can someone please explain how this works, and speculate as to the consequences?

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I am concerned about the impact of the Governments latest house price prop.

The fact that from next April investors with large SIPPS pension funds will be allowed to buy residential property somehow allowing in them a 40% tax dodge.

Can someone please explain how this works, and speculate as to the consequences?

Hello newbie.

Do a search on this site for SIPPS, before ZZG gets ugly on yo ass.

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you should find all sorts of stuff inluding:

1 . limitations on numbers who can afford to buy a prop inside a pension (gov say only the rich, average pension pot is 30k)

2 . high costs involved

3 . fact that SIPPS don't have to contain property and other (better performing) assets could likely prove more attractive things to stuff in a SIPPS

4 . my own feelings that SIPPS could be a honeytrap for non-doms whose usual tax fiddle is being (reportedly) outlawed.

Edited by Sledgehead

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Jaysus dames, no wonder I groan everytime this topic comes up. Did we really discuss it that much or has somebody been retrospectively forging threads?! :blink:

Edited by Sledgehead

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I am concerned about the impact of the Governments latest house price prop.

The fact that from next April investors with large SIPPS pension funds will be allowed to buy residential property somehow allowing in them a 40% tax dodge.

Can someone please explain how this works, and speculate as to the consequences?

Okay there is a lot of stuff on SIPPS in the forum which will give you all the facts. Anyway, this is my take on the SIPPS effect.

August 2005

SELLER: Prices are going to rocket when SIPPS come in, no need to drop my price.

FTB: Prices are going to rocket when SIPPS come in, perhaps I'd better get on the ladder and just buy any old shoebox.

BTL-ER: Can't wait till SIPPS come in, I can get a big tax break.

April 2006

SELLER: Hmm that's funny, prices seem to be sliding if anything, perhaps things will pick up when SIPPS gets going more.

FTB: Hmm SIPPS does not seem to be making a difference, perhaps I should hang on a bit more and see what happens...

BTL-ER: Let's have a look at this SIPPS thing, to see how it can work for me.

November 2006

SELLER: Oh my god prices are just getting worse and worse, better slash the price of mine or I'll be stuck here in negative equity.

FTB: Clearly my interests are best served by putting in really low offers.

BTL-ER: Now that I've had a look at that SIPPS system I've figured out it would be really stupid to put my whole pension fund into a depreciating asset.

Put simply, SIPPS came too late to save the housing market. By April 2006, sentiment will be too far gone.

frugalista

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I am concerned about the impact of the Governments latest house price prop.

The fact that from next April investors with large SIPPS pension funds will be allowed to buy residential property somehow allowing in them a 40% tax dodge.

Can someone please explain how this works, and speculate as to the consequences?

This Times article headed "Perils of putting homes in pensions" is quite short and pithy:

http://business.timesonline.co.uk/article/...1708215,00.html

It covers this, IMHO, main issue -

"On the surface it looks like a flawless scheme to boost the pensions of the middle classes using their weakness for bricks and mortar. But this very weakness for relying on our homes as an investment, rather than as a dwelling place, makes the Sipp scheme dangerous. If your main investment is your house, and your pension is invested in a second home, you are highly exposed to any property crash. Property prices have been known to plummet, despite the sentiment prevalent at present that they are a one-way bet. If you want to retire, and turn your illiquid house into a liquid income, the market will dictate the date of your retirement. "

Eggs. Basket.

p

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Despite the whole Groundhog Day factor of discussing SIPPS again I'm glad this has come up as it saves me doing a search -am compiling a letter for next week's Cornish Guardian about this. In this Thursday's issue they are going to publish a study of the housing crisis in Cornwall so I'm going to stir it up a bit and try and encourage people to write to their MPs complaining about the scheme. After all, Cornwall is probably a chief target area for those wanting to put their second homes into one, and why should those who are priced out of the market have their taxes used to bung them a subsidy?

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Please delete this post before zzg spots it - I'm afraid if he sees another one on SIPPS his blood pressure may actually go off the scale this time

Him and me both, it should be a pinned thread.

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I was reading the article in yhe independant in the blog when something struck me about sipps and IO mortgages.

Havent quite fathomed out what I'm trying to say but I'll have a go anyway.

Lets assume that an investor manages to buy a property in a sipp - no numbers necessary - and does so on an IO. Lets then say that when the capital comes to be paid there is a shortfall in the amount of profit made on the property to pay off the capital.

Would one have to set up a repayment vehicle in the sipp just in case?

If you set up one outside the sipp you could only pay in your allowance for that year so that might not work.

Hmmm, have to go and have a think about this one. :blink:

Still pondering the scenarios but I hope you see what I'm getting at.

D :blink:

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Despite the whole Groundhog Day factor of discussing SIPPS again I'm glad this has come up as it saves me doing a search -am compiling a letter for next week's Cornish Guardian about this. In this Thursday's issue they are going to publish a study of the housing crisis in Cornwall so I'm going to stir it up a bit and try and encourage people to write to their MPs complaining about the scheme. After all, Cornwall is probably a chief target area for those wanting to put their second homes into one, and why should those who are priced out of the market have their taxes used to bung them a subsidy?

Antsy,

Good on you. I have recently written to my MP (Nick Harvey...North Devon) making the same point...the incumbent population here are fast becoming f**ked-off with London bankers driving house prices out of reach with their quite frankly stolen 'earnings'. The idea of the government bunging them a tax break to do this is unbef**kinglievable.

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Antsy,

Good on you. I have recently written to my MP (Nick Harvey...North Devon) making the same point...the incumbent population here are fast becoming f**ked-off with London bankers driving house prices out of reach with their quite frankly stolen 'earnings'. The idea of the government bunging them a tax break to do this is unbef**kinglievable.

I don't see things changing until young people in the West Country peacefully take up residence in empty homes en masse. They need to get organised. They would have the support and sympathy of everyone around them - and who gives a flying one about the second-homers they'd be affecting? Obviously it's disgusting that they should have to resort to that but what is happening there and elsewhere in the UK - I visited a ghost-town in East Anglia not long ago - is simply beyond the pail (or is that pale?).

And no, I'm not a bolshevik. :)

edit - ok, perhaps I'm getting carried away.

another edit - but hang on, you don't have to worry because the government is having loads of shit barratt housing built in devon, whole new towns with everything from cruddy shoebox starter homes to cod-historic executive piles - all, no doubt, priced at just three times what they're worth - problem solved - tadaaah! :lol:

Edited by North London Rent Girl

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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