SA to see influx of UK buyers under new pension incentive

Posted On Monday, 14 November 2005 02:00 Published by
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As from April next year, British taxpayers looking to buy second homes abroad will be able to purchase these through Self-Invested Pension Plans (SIPPs) and have 40% of the cost paid by the taxman.

As from April next year, British taxpayers looking to buy second homes abroad will be able to purchase these through Self-Invested Pension Plans (SIPPs) and have 40% of the cost paid by the taxman.

According to the UK’s Daily Mail newspaper, this is possible because pensions are a tax-free investment, so for every £60 a top-rate taxpayer puts in a fund, the Government adds another £40 as a refund of income tax. Therefore if a person's pension fund pays £100,000 to buy a second home, £40,000 of that will be claimed back from the Inland Revenue, effectively cutting the purchase price to £60,000.

Any rental income generated from these second homes is reinvested into the pension fund tax-free.
 
Lew Geffen, Chairman of Sotheby’s International Realty says, “The new rules will be highly attractive to many UK buyers as they offer both tax advantages and the resources to financing the purchase. South Africa will no doubt become an investment hot spot as it still offers relatively well priced seaside properties if compared globally.

“Overseas holiday home buyers generally look for smaller sized, lock up and go properties, where maintenance is minimal. In South Africa these properties are typically the R2 million apartments with sea views or small secure homes close to the metropole areas. 

“With the new incentive experts expect SIPP holders to pile at least 6 billion a year into UK homes and perhaps £1.5 billion a year abroad, adding up to 5% to housing demand. Although this is great news for the property market and the economy, this will further out price many local buyers as demand pushes prices higher.”

- ENDS

ISSUED BY:                      
LANGE STRATEGIC COMMUNICATIONS

ON BEHALF OF:
SOTHEBY'S INTERNATIONAL REALTY, OPERATED BY LEW GEFFEN

For further information please contact Lew Geffen at Sotheby's International Realty on 011 886 8070 or Robyn Creer at Lange on (021) 448 7407

 


Publisher: Sotheby’s International Realty
Source: Sotheby’s International Realty

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