Brown kills residential property SIPPs?

deemy2004

I don't see how the REITS are particularly different or more advantagious than existing Property investment trusts of which there are many ?

It just looks like a gimmick unless I am missing an important aspect ?

Pal

Surely the appeal of BTL is always that you can borrow a large part of the purchase cost, lending a great deal of gearing to your investment. Putting it into a pension was just a way of maximising the tax efficiency. It has nothing to do with buying "a property" or comparing it with other assets.

Unless pension investors are buying options then REITS, housebuilder shares and so on are never going to have the same appeal as BTL, as you can't buy using other people's money.

deemy2004

sippnewbie wrote:

i find many peoples responses here quite unreal. "serves them right"/ "greedy" / "jumping the gun" etc etc... are you people really so unsuccessful you get pleasure from others financial misfortune (kittie!)? i agree allowing residential property into sipps was a silly idea but can you blame people for wanting to take advantage of it? dunstonh your advice was absolutely correct last week but it was contrary to several ifas i spoke to prior to posting on this board, so im not sure you can blame people who probably got badly advised. my exIFA would have had a big fat fee from me if i didnt think it was "too good to be true" and checked it out.

im now extremely reluctant to invest anymore money into a pension (other than standard work pension), god knows how much the next 20 chancellors will destroy its value before i can actually claim from it, probably when im 130.

Yes it is okay, cos you me and everyone would have been subsidising their second homes !!! Outragious ! and did the pensions industry or the tories question this ? Did the F. Only the Lib Dems stood up and said how daft this was ! ONLY THE LIB DEMS !

I agree with your second point. You have to take a hands on approach to your pensiosn / savings DO NOT PUT IT INTO THE HANDS of others for when it is placed back into your hands at retirement you will be VERY disappointed !

SIPPs are the way to go ! For if you f it up you have only yourself to blame !

Pal

And what makes you think that investments within a SIPP are any safer from future government meddling than any other type of personal pension?


The reason the conservatives never questioned the stupidity of the residential SIPP proposals is because they were too busy planning how to arrange their finances so that they could transfer their holiday homes into their own SIPPS!

deemy2004

Pal wrote:

And what makes you think that investments within a SIPP are any safer from future government meddling than any other type of personal pension?


The reason the conservatives never questioned the stupidity of the residential SIPP proposals is because they were too busy planning how to arrange their finances so that they could transfer their holiday homes into their own SIPPS!

LOL quite true :snow_laug

Thats the problem - The goverment do tinker around and raid the private pensions every now and then thats why the pension should not be your primary savings vehicle !

But at least SIPPS give you the option of moving between asset classes easily. whereas the pensions industry moves as a herd i.e. over the last few years increasingly into goverment stock.

sippnewbie

deemy2004 wrote:

Yes it is okay, cos you me and everyone would have been subsidising their second homes !!! Outragious !

i dont really get your point. from where im sitting had i bought a house through a sipp all i'd have done is get back the tax i had already paid subsidising others. you would never have been able to claim back tax you hadnt paid and as a 'tax back' scheme it would have only benefited people who already pay way over the odds in tax, actually it would have been a removal of subsidies!!! i agree though that it would have lead to an obvious and large loss in tax revenue which is partly why i never believed it or fully planned for it.

dunstonh

I find many peoples responses here quite unreal. "serves them right"/ "greedy" / "jumping the gun" etc etc... are you people really so unsuccessful you get pleasure from others financial misfortune (kittie!)?

If people choose to do these things in advance of the rules being set, then they have to accept the risk that goes with it. Its all about risk and reward. Personally, I have said all along that people should wait. So, yes I feel vindicated in that and those that havent followed that advice or have done it without investigating the risk (or getting advice) only have themselves to blame.

dunstonh your advice was absolutely correct last week but it was contrary to several ifas i spoke to prior to posting on this board, so im not sure you can blame people who probably got badly advised. my exIFA would have had a big fat fee from me if i didnt think it was "too good to be true" and checked it out.

Under the TCF requirements from the FSA, any IFA that gave advice that has now been rendered obsolete has a requirement to go back and re-visit the clients and advise accordingly.

The following appeared in a bulletin sent this morning:

Clearly many advisers have been providing advice over the last months based on what was known on Monday of this week. This advice has included the setting up of SIPPs in preparation for investment into residential property post A-Day. This new announcement means, in the interests of treating customers fairly, you should revisit advice you have provided to assess the impact of these changes and take whatever action is needed to ensure your clients are in a position that is both suitable and technically possible. This will include recommendations that:

• are based on any 'proposed property purchases';

• place pension assets in cash until A-Day;

• include investment into a SIPP or SSAS;

• include investment into 'off-plan' property purchases, particularly where the investment has
already been made.
This list is in no way exhaustive but hopefully covers the main areas of activity over the last few months.

im now extremely reluctant to invest anymore money into a pension (other than standard work pension), god knows how much the next 20 chancellors will destroy its value before i can actually claim from it, probably when im 130.

1988 introduced personal pensions to replace retirement annuity contracts. 1989 changed the contracting out lump sum benefits introduced in 1988. 2001 introduced stakeholder to replace personal pensions and changed SERPS, along with some other changes. 2005 (pending may occur Jan 06) - the requirement to document why a stakeholder pension is not being recommended, known as RU64, is to be removed. This is due to stakeholders actually turning out to be as desirable as hoped. 2006 - A day changes.

In less than 20 years, the above rule changes have occured. There have been other tweaks in that time too. You also have the introduction and removal of other products which at various points could have been better. How many changes are there going to be in the next 20?

sippnewbie

dunstonh wrote:

Under the TCF requirements from the FSA, any IFA that gave advice that has now been rendered obsolete has a requirement to go back and re-visit the clients and advise accordingly.

i appreciate your thoroughness even though we both know it is not neccesary other than for regs and your piece of mind. interestingly i wonder if i ever hear from the ifa's i actually met and who suggested the idea, and others!

dunstonh wrote:

How many changes are there going to be in the next 20?

my point exactly. i think the pension 'pot' is increasing seen as an extra revenue the government can dip into, it wouldnt suprise me if over the next 30 years the tax benefits of private pensions were slowly striped away until they were simply savings accounts.

dunstonh

interestingly i wonder if i ever hear from the ifa's i actually met and who suggested the idea, and others!

In reality, probably not. However, if you followed the advice and he didnt come back to you and you made a complaint, the TCF requirements would be held against him. It would certainly make it harder to justify his position.

The TCF requirements are being taken very seriously by the regulator. However, I know some firms that do not treat it at all seriously. I reckon the FSA would just love to punish some for falling foul of the TCF and this would be a good opportunity for the FSA to make an example of some. Hence, why I believe that bulletin was issued this morning (there were other points included to highlight the importance of follow up - that was just a partial copy and paste).

EdInvestor

Pal wrote:

Surely the appeal of BTL is always that you can borrow a large part of the purchase cost, lending a great deal of gearing to your investment. Putting it into a pension was just a way of maximising the tax efficiency.

Indeed so.

Most landlords dismissed the SIPP opportunity out of hand as it provided little tax advantage compared with that available already, and confiscated your capital in the end.Certainly not something I would have considered