Sipps: Lmao

[The Masked Tulip]

I was just reading in the Mail that people have already signed contracts to buy houses next April on the back of SIPPs coming in.

Apparently, a higher tax rate earner was expecting to get a 128K house for effectively 77K and that such people, if they have signed, are now going to have to find the 50K odd difference!

LOL!

This is bound to have an affect on HPs now as these people move to off-load them ASAP!

[a j]

I'm sat at my desk wondering how many have signed up to new build flats!

[Yankee]

I was just reading in the Mail that people have already signed contracts to buy houses next April on the back of SIPPs coming in.

Apparently, a higher tax rate earner was expecting to get a 128K house for effectively 77K and that such people, if they have signed, are now going to have to find the 50K odd difference!

LOL!

This is bound to have an affect on HPs now as these people move to off-load them ASAP!

Could this explain the dead cat bounce this fall?

[Sledgehead]

I was just reading in the Mail that people have already signed contracts to buy houses next April on the back of SIPPs coming in.

Apparently, a higher tax rate earner was expecting to get a 128K house for effectively 77K and that such people, if they have signed, are now going to have to find the 50K odd difference!

LOL!

This is bound to have an affect on HPs now as these people move to off-load them ASAP!

I can't work out whether:

1 . It would be pointless buying into th eSIPP because they get no tax relief, but willbe taxed on draw down above and beyond the tax free lump sum withdrawl limit, or

2 . They simply won't be able to buy into the SIPP cos they just won't be able to get the funds in there, in which case,

3 . They'll have to find an extra 128k outside the SIPP in order to make good on the contract.

There have been noises about measures to mitigate the impact of this, but I haven't a clue what these might be. Presumably a motivated seller (usually refers to poor skint bugger, but could just as easily be applied to these gun-jumpers) would be the most likely to have the answer to this last question. perhaps we need a new term: motivated sipper.

[Realistbear]

Those who signed up for a SIPP property may be able to cancel the contract due to the unforeseen change in the law. The old contract may have been "frustrated" rendering it void and unenforceable. If the Sipper made it clear to the EA that the purchase was for that particular purpose. A good one for the commercial lawyers to sink their teef into.

Either way, if they have to proceed with the purchase they will want to unload. If not, there are a few more additions to the growing unsold inventory of houses! Win-win situation for FTBs, STRs.

[Sledgehead]

Those who signed up for a SIPP property may be able to cancel the contract due to the unforeseen change in the law.

What change in the law? Was anything of this nature actually on the statutes? I don't fink so!

If these guys get compensation I will be organising a class action against the government for all those who lost out due to the scrapping of the dividend tax credit. That bill stands at over 40billion.

Edited December 7, 2005 by Sledgehead

[doogie]

Could this explain the dead cat bounce this fall?

Yes, definitely.

Until yesterday there was a popular perception that now is a great time to buy at any price, because come next April there would be loads of 'greater fools' willing to pay even more.

Of course we all knew there wouldn't be, but the mere expectation was enough to encourage a lot of sheeple to pile into the property market this autumn.

[The Masked Tulip]

Those who signed up for a SIPP property may be able to cancel the contract due to the unforeseen change in the law.

According to the Mail they can't cancel if the house is already built to a stage where it is now classed as being 'residential'. If it is not 'residential' yet they can get out. UK Law = bizarre!

[OnlyMe]

Could this explain the dead cat bounce this fall?

Look what it did to the wine market!

http://business.guardian.co.uk/story/0,16781,1660419,00.html

The price of a case of 1996 Lafite has jumped from £1,600-£1,700 in July to about £2,500 this week, largely because of interest from Sipp buyers. Mr Milroy said that there are few signs yet that investors are dumping the wines back on the market. "We may find that people now want to sell but hopefully things won't go belly up."

At John Armit Wines, investment specialist Ian Elton Wall says the market has been here before - there was a mini-boom spurred by business expansion schemes in the early 1990s, and a bigger boom running up to the Asian financial crisis in 1997. Then, prices of blue-chip wine collapsed by about a third.

[Sledgehead]

According to the Mail they can't cancel if the house is already built to a stage where it is now classed as being 'residential'. If it is not 'residential' yet they can get out. UK Law = bizarre!

But there are two separte issues here:

1. Can one pull out of an off-plan contract

2. Can one get money out of a SIPP

For 1. the answer must be dependant on the contract signed.

For 2. the answer must be only when one gets to an age when vesting of funds in the form of tax free lump sums is deemed legal (50 I believe).

As for the idea that one could put previously purchased assets into a SIPP "just like that", as an in specie contribution, this was even more tenuous than the whole idea of resi prop in a SIPP. I think th eguy was living in cloud nine by imagining this would ever be possible. Folks have to sell and buy back even a few grand's worth of shares to get them into an ISA. Whatever possessed people to think SIPPs are any different?

Edited December 7, 2005 by Sledgehead

[OnlyMe]

As for the idea that one could put previously purchased assets into a SIPP "just like that", as an in specie contribution, this was even more tenuous than the whole idea of resi prop in a SIPP. I think th eguy was living in cloud nine by imagining this would ever be possible. Folks have to sell and buy back even a few grand's worth of shares to get them into an ISA. Whatever possessed people to think SIPPs are any different?

Quite - shows an almost total lack of knowledge of the regulations as they were going to be or indeed a total disregard for them.

[Brian Potter]

According to the Mail they can't cancel if the house is already built to a stage where it is now classed as being 'residential'. If it is not 'residential' yet they can get out. UK Law = bizarre!

i may be wrong but I thought you could pull out of any transaction on property right up until you exchange contracts - usually on the day.

When I bought a new house the only penalty was loss of deposit.

Like I say I may be wrong. I stand to be corrected.

[teddyboy]

i may be wrong but I thought you could pull out of any transaction on property right up until you exchange contracts - usually on the day.

When I bought a new house the only penalty was loss of deposit.

Like I say I may be wrong. I stand to be corrected.

From what I have read - they can pull out but lose that deposit. The other factor that covers them is that when selling the SIPPS idea it should have stated that the details HAVE NOT been finalised and are subject to change. Anyone signing a contract that is this losely worded is a COMPLETE KNOB!

AND YES.... I LAFFED ME CCK OFF!!

[ILikeBigBoobs]

2. Can one get money out of a SIPP

I think if you can show the revenue that you put thhe money into the SIPP purely in order to buy a residential property or fine wine etc. which was mooted but not implimented than you will be allowed to release it out of the SIPP.

[Sledgehead]

I think if you can show the revenue that you put thhe money into the SIPP purely in order to buy a residential property or fine wine etc. which was mooted but not implimented than you will be allowed to release it out of the SIPP.

Why?

That means I should be able to withdraw all of my pension contributions seeing as at the time I put them in, I did so in order to take advantage of the de facto dividend tax credit I would receive on all dividend paying assets. I could theoretically point out that I need not have lost a theoretical fortune in the current pensions debacle, had it not been for the removal of said credit, thus making the government doubly culpable.

The benefits to which you refer were, as you admit, merely a rumour. That makes the case supporting withdrawl weaker than my own and much weaker than those of my theoretical self refered to above.

NOT A LEG TO STAND ON.

You say you like big boobs. They don't come much bigger than that! You should be smiling.

Edited December 8, 2005 by Sledgehead

[ILikeBigBoobs]

Why?

Dunno, but there was a short note somewhere in the FT to the effect that the situation would 'be looked at' by the IR or WTTE.

[OnlyMe]

Sledgehead,

Why?

That means I should be able to withdraw all of my pension contributions seeing as at the time I put them in, I did so in order to take advantage of the de facto dividend tax credit I would receive on all dividend paying assets. I could theoretically point out that I need not have lost a theoretical fortune in the current pensions debacle, had it not been for the removal of said credit, thus making the government doubly culpable.

Too damn bloody right.

The benefits to which you refer were, as you admit, merely a rumour. That makes the case supporting withdrawl weaker than my own and much weaker than those of my theoretical self refered to above.

Too damn bloody right.

NOT A LEG TO STAND ON.

We'll see, if there is compensation I think it will set the scene for actions to be taken regarding dividend tax credits.

[zorn]

I was just reading in the Mail that people have already signed contracts to buy houses next April on the back of SIPPs coming in.

Apparently, a higher tax rate earner was expecting to get a 128K house for effectively 77K and that such people, if they have signed, are now going to have to find the 50K odd difference!

Not necessarily. Remember, the people were never buying those properties, their SIPPs were -- they are separrate legal entities. So presumably the contract is between the SIPP and the developer, and unless the developer has been very careful about how the contract was worded, then the frustrated investor can simply walk away and the developer will only have recourse to the SIPP -- which may not have any money in it yet.

[OnlyMe]

Not necessarily. Remember, the people were never buying those properties, their SIPPs were -- they are separrate legal entities. So presumably the contract is between the SIPP and the developer, and unless the developer has been very careful about how the contract was worded, then the frustrated investor can simply walk away and the developer will only have recourse to the SIPP -- which may not have any money in it yet.

Good point, but there seem to have been people doing all sorts of things, presumably deposits will have already been paid for the off plan stuff (that would have required real money placed somewhere, presumably into the SIPP if the SIPP had been the legal entity). Of course it is not just the SIPP buyers involved in this it is all those that have pre-emptively jumped on the badnwagon hoping to gain next Spring.

[FTBagain]

Good point, but there seem to have been people doing all sorts of things, presumably deposits will have already been paid for the off plan stuff (that would have required real money placed somewhere, presumably into the SIPP if the SIPP had been the legal entity). Of course it is not just the SIPP buyers involved in this it is all those that have pre-emptively jumped on the badnwagon hoping to gain next Spring.

I have read this morning that there could be up to 20 000 properties involved. Not that many in the great scheme of things, but if they all hit the market in the next few months it could generate quite a shock. And not just in the number of houses for sales but bankruptcies as well. There could be few out there who got in over their heads hoping to flip in April.

Just another brick in the wall, or is that nail in the coffin.

The thing that really interests me, though, is the impact on sentiment. There will be the usual nashing of teeth, but when the dust settles will people saybe saying,"SIPPS that was it! GB taking property out of SIPPS that was what did for the housing market!", over the next few weeks and months. If the folks down the pub start talking about SIPPs and property in the same sentence then GB has done us a lasting favour.

Only time will tell.

Edited December 8, 2005 by FTBagain

[2005]

I have read this morning that there could be up to 20 000 properties involved. Not that many in the great scheme of things, but if they all hit the market in the next few months it could generate quite a shock. And not just in the number of houses for sales but bankruptcies as well. There could be few out there who got in over their heads hoping to flip in April.

Just another brick in the wall, or is that nail in the coffin.

I don't think the number of properties involved or the number of people who were hoping to put property into SIPPS in the near future is important in the grand scheme of things.

The big impact IMO was sentiment and the number of EA's who were telling vendors to hold on until the spring with higher house prices because SIPPS would create another house price boom.

It will be interesting to see if those houses that have been sat on the market for a year without a sale and with vendors refusing to lower their prices now start to reduce the prices to shift them.

I shall be watching for the number of reductions on all properties, not just 2 bed flats, as a measure of the impact of SIPPS

[RIP]

Well I've only just managed to start breathing again after laughing so much about the SIPPS reversal. Classic. But, all those gun-jumpers are wrong, it's not a reversal because it never happened!

You may titter (missus) at my quaint letter-writing fetish, but I'd like to take personal reponsibility for the change after my long-winded rant to Gordon a month ago. No, you literal readers, I'm joking of course.

BUT letter-writing DOES have an effect however small - and all our small individual efforts eventually create a flood. The least I could do was write back to him today:

"After berating you recently, the least I can do is say

THANK YOU VERY MUCH!!

for withdrawing the proposal to allow property into SIPPS.

At last some sanity has returned and normal people and families can get on with buying houses TO LIVE IN and not PROFIT FROM.

Please do not succumb to any claims for “compensation” from greedy fools who have jumped on the bandwagon in advance. I never got any compensation for the withdrawal of dividend tax credits from my pension fund – property-SIPPS have not been “withdrawn” because they never existed!"

Thank you Sledgehead, apologies for plagiarising your pension divi tax credit quote - mustn't allow these buggers to get "compensated".

Oh, they DO read them eventually - finally had a reply from Gordon's office, and recently another from Boris's man M Crawshay-Williams (great name!). Naturally the latter (the letter, not Mr C-W) now holds pride of place framed on my lavatory wall.

They're on the run now......

PS> Place down my road put on a month ago for £395k. Already switched agents and down to £355 according to the local rag.

[Guest consa]

One in thousands of disappointed leeches

Stuck with a £200,000 flat and no tax relief

JULIAN WARD is one of thousands of investors who planned to pour as much as £8.5billion into the British housing market on the back of a generous tax break on residential property.

Instead, after the Chancellor’s dramatic turnaround yesterday on what investments would receive tax concessions in self-invested personal pensions (Sipps), Mr Ward is stuck with a £200,000 second property and has missed out on tax relief of up to £102,000.

The 40-year-old mortgage broker recently completed the purchase of a two-bedroom flat in Colchester with the intention of putting it into a Sipp.

He hoped eventually to add to his property portfolio, which includes a family house in Kent, with a holiday home that he also planned to put in the Sipp.

http://business.timesonline.co.uk/article/...1910860,00.html

[Sledgehead]

Thank you Sledgehead, apologies for plagiarising your pension divi tax credit quote - mustn't allow these buggers to get "compensated".

On the contrary: thank you for your vocally literal (or do I mean literally vocal?? ) efforts. Intelligent politicians may not change policy on one letter, but they may well enquire how widely held the expressed sentiments are. With the next election 3-4 years away any sensible politician would be wise to multiply the discovered set size by 3 or 4, all of which would have been of voting age and in the formative stages of politicisation.

Having said that, I still believe the whole sipps thing was a red herring, but a belt and braces approach never hurt anyone.

... a reply from ...Boris's man M Crawshay-Williams (great name!).

You really should try and catch the re-runs of Jeeves & Wooster (on Beeb3 or other secondary digital channel). They aren't in widescreen (zoom it if it annoys) but they are chock full of deliciously daft toffs with names to match. Wodehouse did a fine job writing the books, but frankly the plots (all beserk) are almost irrelevant: just stick Laurie as Bertie Wooster in front of a camera reciting names like Pongo Twistleton, Gussie Fink-Nottle, Monty Byng etc and I'm chuckling away like the fool I am.

Having said that, PG never invented the name I would take if I could be bothered to deed poll myself. It's all my own creation (use it elsewhere only if you want my lawyers on your coat tails) : Bostock Box-Bagful

Not bad eh?

[red]

The prat of the day award goes to mortgage broker Julian Ward.

So let's get this straight. Mr Ward works in an industry that spins and hypes products to attract suckers in. And he managed to suck himself in!

Priceless. It goes a long way to explaining why we're where we are now.

A fool and his money...

Incidentally, I spoke to the EA who sits next to me at the footy last night (awful game) and asked him, as I do regularly (and playing slightly stupid), how the market was down in Kent.

"Dead. Been dead for months."

"Oh, right", I replied. "What about this SIPPS thing? How is that going to affect you?"

"Well, loads of people will pile their BTLs into it and I reckon things will take off early next year."

HE DIDN"T EVEN KNOW ABOUT THE REVERSAL OF THE DECISION!

I didn't say anything. The fact that an EA who runs his own office doesn't even know about it says it all...