Liberty SIPP

• Member Login
• Sign up

Residential Property and SIPPs: Waiting for Gordo?

An open letter to Mr. Gordon Brown - First Lord of the Treasury

Dear Gordo,

Please excuse the familiarity but I feel that I know you quite well and as a fellow jock there is a natural menschkeit between us.

I am writing to make a suggestion which I feel could release a bit of cash into the economy and earn you a few brownie points into the bargain.

This is no bailout, no stimulus package, just a simple “U Turn”.

My proposal is quite simple, all you have to do is swallow your pride and reverse your decision to allow residential property into SIPPs – but don’t panic I think there is a way you can do this without inhaling.

The problem the last time this was a favourite subject of the chattering classes was the way it was handled and promoted. It looked like it was going to be the biggest filling of boots since the old lady and her family moved into the shoe. There were a lot of people in the SIPP industry who were wary about the development and with certain organisations offering headline property deals at “40% discounts” or offering the whole of Bulgaria at knock down prices they had a point.

When you did your “U turn” it was probably the right thing to do; not only did you avoid a massive miss-selling free for all, but you must have saved the Treasury an absolute bounty on the tax relief that would have been due to people dumping property into their SIPPs on an in-specie basis – such an outpouring of Treasury cash wouldn’t have reflected well on the Iron Chancellor.

Old hat? You may be right to think so, but let’s look at this with our prudent heads on and please bear with me.

This is what I suggest:

1. Don’t allow in-specie contributions of property – the Treasury can rest easy about tax relief and sit on their cash for a while (before giving it to the Banks)
2. Don’t allow primary residences to be put into a SIPP – it never made sense with the existing CGT benefits that they hold
3. Restrict gearing for residential purchases to 25% of fund assets – would mean that there would still be a level playing field for all potential property buyers and not a skew towards SIPPs

So what’s the upshot?

Well, for you personally there could be 5 more years of office! The people who will potentially benefit are those who occupy the battleground for the next election and who are firmly in David Cameron’s sights: the buy to let holding, holiday cottage owning, kids in a University flat, helping kids get on the housing ladder middle classes who are also, coincidently, the ones feeling the brunt of the Lehmans, Madoffs, Goodwins and Jonny Fat Cat authors of the current one size fits all recession.

Done sensibly, this might just work! When you were chancellor you thought like a chancellor and acted like a chancellor but now you are Prime Minister your must put aside such chancellorish things; U really can turn if U want to, or will the economy and the country be waiting for Gordo?

Good luck, your country needs you.

Apr 30, 2009