Assetz^® News » HOME | FEED | LIST ALL ARTICLES | ASSETZ HOMEPAGE

Assetz^® Property News Service

Sipps: don't believe (all) the hype

---

The anticipation leading up to the introduction next April of property investment Self Invested Pension Plans (Sipps) is reaching fever pitch as property analysts, pensions managers and the general public begin to grasp all the options available to them.

The changes have been billed by Lloyds as "the biggest changes to the pension system since 1908," and have been predicted by normally sober pundits to both revolutionise the nations ropy pensions savings approach and democratise investment – particularly buy to let and jet to let property investment.

The 100,000 people who currently own a Sipp is set to expand dramatically if the number of potential investors – over two million who currently own an overseas investment property is taken as any guide. But are we in danger of running away with ourselves in all the excitement?

Stuart Law, managing director of Assetz, is one who is advocating a more measured view of the possibilities. While he recommends the system, he said that it remains to be seen how many places in the world they will prove to be legally compatible.

"Markets such as Dubai may suffer due to the fact purchasers don't actually own the freehold to a property," he told the Observer. "Emerging markets such as Bulgaria, Turkey and Croatia are also likely to concern them (Sipps providers), since evidence of a strong resale or rentals market will be limited or non-existent."

A further problem for more obscure markets outside the EU is the uncertainty that surrounds long term market stability, provable rental yields and likely property investment resale prices, said Nick Dare of UK investment firm Letterstone. He adds that newcomers to the market could well be taken for a ride on the long term potential of any given property.

And of course, in order to reap the potential benefits of a Sipp, a property must be in a country with a compatible tax system.

"France may sneak into the lead since it has a preferable capital gains tax policy," said Mr Law. "Spain would still apply 15 per cent capital gains tax to the sale of the property if it was purchased within the recommended company structure.

"Established holiday locations - Costa del Sol, Costa Blanca and Mallorca - will be strong. That's where you have the greatest chance of a decent rental income," adds Shaun Powell of Lighthouse, an association of Spanish estate agents. On balance all are supportive of Sipps investment and optimistic on the opportunities it will bring – but don't believe (all) the hype.

---

Accessing the news service

You can view all of the Assetz® UK, International and UK Property Investment Articles and News here.

We also provide an Feed of the news service, or you can view all articles. Click here to view more information on RSS readers and how they make reading online news more convenient.

Terms of content usage:
XML and other types of publication of this article title and the URL of this page are permitted using the RSS feed or other methods.
Article content strictly prohibited from duplication on any other site directly other than first paragraph included in the XML feed.

Copyright © 2001-2009 Assetz® News Limited. All Rights Reserved | Company Information | Assetz® Homepage
Assetz House, Newby Road, Hazel Grove, Stockport, Cheshire, SK7 5DA
TEL (UK): 0161 456 4000 FAX: 0161 482 7588
TEL (International): +44 161 456 4000 FAX: +44 161 482 7588