SIPPS shock as Brown shelves tax loophole for residential property.

One clueless commentator then.

Reply to
Andy Pandy
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Or live in the property without paying a market rent, or incurring a BIK charge.

Many people were simply too thick to realise that they couldn't use the SIPP to get a tax free second property that they could treat as their own. The government were probably just worried about policing tax evaders, whether deliberate or through stupidity.

Yup.

Reply to
Andy Pandy

No more than tax relief on any pension contribution.

Not for long hopefully.

It would have been "stuck in the SIPP" regardless. They couldn't have benefitted from the property in the SIPP at all until the same time as any other type of pension fund.

Reply to
Andy Pandy

Some interesting comments on SIPPS, debt, house prices etc in todays email from Moneyweek (financial mag)..........

"Even if the cold weather and the approach of Christmas have brought shoppers onto the high streets, they are still keeping one eye on their wallets. BRC director general Kevin Hawkins said that shoppers remain "value-conscious" and that stores are still relying on discount offers to push sales, especially on housing-related products.

And it's small wonder that consumers are feeling "value-conscious" - they need to be.

Amid rising energy prices, petrol bills, and charges for things like haircuts, education and healthcare, the only thing that was keeping consumers feeling good about the future was rising house prices.

But house prices have pretty much stopped rising now - some surveys even suggest they are falling. And Gordon Brown has now pulled away the one thing that most estate agents were relying on to re-inflate the market. Which was the prospect of hefty discounts for higher-rate taxpayers on investment property bought through Self Invested Personal Pensions (Sipps).

Of course, the key voices in the property sector are now falling over themselves to suggest that Sipps didn't really matter that much in the first place. Here's Keith Astill, managing director at UCB Home Loans, the buy-to-let arm of Nationwide building society.

"The decision will not have any major effect on the long-term health of the buy-to-let sector, as it affects only a small proportion of the market."

But further down the same press release, we read that in October, 68% of mortgage brokers said they were considering putting buy-to-let property in a Sipp, and they would be suggesting that their clients do the same.

The majority also felt the buy-to-let sector "would be boosted by the pension changes", while 65% believed it would "boost sales of buy-to-let property" by between 20% and 40% "in the first year."

So if the mortgage brokers are right, that's a big chunk of buy-to-let properties that won't be sold next year. And if buy-to-let investors aren't there to take the place of first-time buyers who have been priced out of the market, then what will happen? That's right - prices will fall.

And if you're still not convinced that the property market is heading for trouble, news from The Mortgage Works, Portman Building Society's buy-to-let arm, just might persuade you.

The group announced on the morning before the pre-Budget report that it has stopped accepting applications for buy-to-let mortgages on new-build properties under one year old. Why?

Because "owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science... we will go back into new build buy-to-let when we believe that the market forces of supply and demand have reached equilibrium."

Wait a minute. Over-supply? Isn't the Government trying to encourage new house building? Isn't the perennial argument of the property bulls that there are too few houses to go round?

If there are too many houses, there are too many houses - it doesn't really matter what age they are. And again, that points to lower prices.

But the property pundits are incorrigible. As if to talk up the market in the wake of the Sipps bombshell, the Council of Mortgage Lenders yesterday upgraded its forecasts for house price growth for next year, from 0% to 2%.

And meanwhile, estate agent Bradford & Bingley is encouraging people to "remortgage now and offset the cost of Christmas". That's right

- it's offering a range of remortgaging deals which give customers cashback on completion of the deal, just in time for Christmas.

"These cashbacks are great for borrowers whether they want to use the money to help pay for the Xmas excess, save it or put it towards home improvements," gushes B&B's mortgage development manager.

Bankruptcies are at record highs. Repossessions are rising. Mortgage lenders are pulling out of the new build market because there are too many houses being built.

In light of all this, here's our top tip for anyone tempted to fund this year's Christmas spending by borrowing more money on their house. If you want to enjoy next Christmas under your current roof, don't."

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Reply to
Crowley

But your arent being given a 40% tax break for buying a property. You're being given a tax break for putting the money into a pension. Does it matter that that the pension then goes and buys a house with the money.

The fact that the property had to be managed by an independent third party, market rent had to be paid if it was used by the pension owner and that the funds had to remain in the pension to be used to buy an annunity by age 75 (is that the rule?) seem enough to stop people casually putting own houses into their pension.

Because buying a house to put in a SIPP is a bum deal unless it is a genuine way of diversifying a pension investment.

It would be stuck in the sipp anyway.

tim

Reply to
tim (moved to sweden)

As there is also a limit each year of actual earnings, this guy must be earning rather a lot.

How many people earn this much each year?

tim

Reply to
tim (moved to sweden)

I'm inclined to agree. The FSA should have vetted the way these plans were being sold much more thoroughly.

tim

Reply to
tim (moved to sweden)

It matters for the housing market and may have been partially responsible for propping it up for so long particularly with regard to the crucial factor of sentiment.

But not from buying second homes/holiday homes with a 40% tax break.

I know. But the people we are talking about put the money in the SIPP with the intention of buying residential property and now they can't.

Reply to
Crowley

In message , M Holmes writes

I tend to agree with you but how do you run a reasonably caring society without a central organising committee of some kind:

Health, waste, libraries, crime, roads, education etc.

all of which seem to need to be free at the point of supply.

Housing - which probably should be available free or low cost at the point of supply to the poorer/disadvantaged members of society.

??

Reply to
Richard Faulkner

Agree completely but not sure what your point is?

The question was the effect that £10 billion, (or the lack of it), would have on the housing market.

I suggested that it would represent only 10% of annual sales, (corrected to maybe 6.6% of sales), which would not be particularly significant.

Not sure where anyone mentioned 10% of the total property stock?

Reply to
Richard Faulkner

You're not starting from first principles, and therefore getting ahead of yourself. You can't just assume that a "reasonable caring society" is one of the must-have components of an ideal libertarian world.

The idea is that if any of the above are in demand, people will buy them.

Especially crime. Next, you'll be expecting us to pay burglars to come round and ransack our homes. Oh, come to think of it, that's exactly what we do. We give them free room and board, colour telly, snooker, etc, for as long as the nice man in a black robe and white wig can be persuaded to prescribe.

Libertarian utopia doesn't have poor or disadvantaged members.

Reply to
Ronald Raygun

'Good morning, can I have two pounds of crime please?' 'Sorry, sir, I'm not allowed to sell you two pounds of crime, but I can sell you 908 grammes instead.'

Reply to
me

In fact, its a crime to sell you two pounds of crime.

Reply to
Tumbleweed

You won't see politicians involved with those other than in mucking them up.

Perhaps not if we all had 100% of our wage to take home.

Companies, charities, churches, unions. However people want to organise it themselves free of interference.

FoFP

Reply to
M Holmes

Alternatively, cede the market in 908 grammes of trouble, such as cocaine, to criminals by removing any legal outlets, and you get the same effect multiplied by a couple of orders of magnitude.

FoFP

Reply to
M Holmes

What are the first principles then? I would guess that many people would aim for reasonably caring, with opportunity - not sure how that compares with libertarian utopia.

MMM! But those who cant pay, (or wont pay in many cases), will suffer bad health/die, chuck their waste in the street, remain uneducated. In relation to crime, would we pay for local services, and do the police ignore crime against people who dont/cant pay, or people who are in London, but pay in Manchester. Roads - only profitable roads would exist

- a moot point? Etc.....

Cant argue with this - freedom to commit crime has gone too far.

???

How do you create, sustain, or even define this libertarian utopia, and who decided that this was the goal?

Reply to
Richard Faulkner

Sounds ideal, but I cant help thinking that human nature would return us to the middle ages, or stone age, or whatever.

Reply to
Richard Faulkner

perhaps some sarcasm was implied?

Reply to
Tumbleweed

In message , Tumbleweed writes

I guessed that, but am still not sure what is meant by libertarian utopia, or how a community/country would operate without a central body to manage central things.

Reply to
Richard Faulkner

Of libertarianism? That negotiations between people shouldn't be mediated by force or threat of force.

This probably isn't the place to discuss philosophy though.

It wouldn't change how people thought or what they valued, merely that they'd be free to organise to achieve their objectives without interference from the state.

FoFP

Reply to
M Holmes

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