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Bear Goggles

Sipps Will Have No Effect On Market

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I have just received a reply from the "Ministerial Correspondence Unit" to my letter to HM Revenue & Customs about SIPPS. (still no word from my MP yet).

It starts as a pretty standard letter and tells me how property in a SIPPS is not a free lunch

The property becomes an asset of the pension fund and there is a requirement

to put all rental income into the pension fund so it is locked away. In

most cases the property will need to be sold to secure a pension when the

member retires. Any currently owned property placed into a pension fund

will need to be sold and then re-purchased by the fund. This will incur

transaction costs, including stamp duty land tax for the purchaser, and any

gain may be liable to capital gains tax. The pension fund will be required

to charge commercial rates for any use of the property or the individual

will suffer a benefit-in-kind tax charge.

It goes on to say that SIPPS shouldn't effect the housing market.

At the moment only around one per cent of pension funds are held in SIPPs.

Given the number of people for whom SIPPs are an appropriate type of

pension, and the inherent limitations attached to this type of investment,

it is highly unlikely that there will be any appreciable effect on the

housing market.

We already know all of this, but amateur BTL muppets probably need to read it.

Like I've said before, it is the principal of SIPPS that is bad rather than the reality, the perception that 'my property is my pension' that this policy reinforces is bad for anyone who wants to own a home rather than a speculative asset. It was good to get a responce at last though.

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