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The Sunday Times - Money Questions 01/11/09

Posted by Jill Kerby on November 01 2009 @ 14:21

 

The Sunday Times 

MoneyQs

November 1/09

 

DL writes from Dublin:

I've read that it used to be possible to buy a property as a means to a future pension. Is this still an option? If yes, please can you explain who I should contact if I want to proceed with this? Should I approach any financial adviser or are there specialists in this area? Does the property have to be based in Ireland? My partner and I are both employed. Our combined salaries are approximately €110,000. One of us has a private pension the other does not. Our primary residence is mortgage free. We already have two investment properties with mortgages and these are paying for themselves. We are both in our late forties. Can you please clarify how much we could pay towards a property pension annually? Is it possible to purchase a property for €100,000 (approx) and obtain tax relief via pension contributions towards the purchase of this.

 

I think it would be a very good idea indeed for you to consult with a 

specialist pension consultant about your idea of buying yet another property. 

I passed your letter onto independent, fee-based financial advisor, Vincent Digby of Impartial.ie who said, “Before jumping directly to the ‘which property should I buy ’ conversation, I recommend your reader review his overall pension strategy and planning especially since he is already materially exposed to the property market for pension and non pension assets. Concentration of investment in one asset class is particularly risky and not something I would recommend.”  Digby says that if you buy another property for pension purposes, you need to be aware of how current and future risks like rental voids, falling rents and oversupply and the fact that there is no guarantee about capital appreciation could affect the value of your pension and retirement. “If he is determined to increase property exposure in his pension, he should consider not just a single property, funded either through a self-administered pension, if it applies in his case, or in a self-directed life assurance based pension into which you can include a residential or commercial property, but also a property fund based investment that can reduce the negative impact of rental voids via a larger diverse portfolio.”   This is a complicated issue:  your advisor can explain all the details, including the size of the contributions you each can make and the tax relief you each claim. 

 

BC writes from Co. Dublin:

I am writing about my daughter who has lived in London for two years. On July 10th she had her handbag robbed while sitting in a restaurant with her boyfriend. Along with her brand new expensive handbag, her phone, MP3 player and makeup was her Barclays Bank ATM. She telephoned the bank within 40 minutes to cancel the card but by then the thieves had used it several times and had taken 350 pounds.  She has a job that only pays minimum wage and can ill afford to lose this money. She has written to the bank but they have refused to refund the money as her Pin number was used. She had withdrawn some cash earlier from an ATM which was known to be subject to tampering and she assured me she did not have the pin number written down anywhere in her bag. I am positive my daughter was not to blame. Is there anything you can do to help?

Just like here in Ireland, when there is a dispute over card fraud, your daughter should write to her bank with an explanation about the theft (and ideally include a copy of a police report) and request a refund.  If this is unsuccessful she can make a formal complaint to the Financial Service Authority Ombudsman and ask them to investigate her complaint.  She can download a complaints application form at www.complaint.info@financial-ombudsman.org.uk which must them be posted back, or she can speak to someone directly on their consumer help-line: 0300 123 9123. 

 

RMcC writes from Dublin:

Is now a good time to start paying extra off my tracker mortgage. At 1.75% I pay €700 with 18 years left to run.  Is now a good time to sell the house, which is in Dublin and either invest in something else like equities, seeing as house renting is pretty cheap or move to the south east? How can I find out about price drops in various areas?

 

I always think it’s a good time to pay off mortgage debt – if only for the peace of mind – but now is an especially good time because the value of your property is falling while the debt is not.  You’re very lucky to have such a cheap tracker rate, but interest rates are more likely to go up than fall going forward.  As for selling up and renting, that entirely depends on how much you are willing to accept and how much rent you can afford.  The latest Daft.ie house price report for the third quarter of this year might help you make your decision: it show by how much both residential property prices and rents have fallen so far this year.  Most commentators seem to agree that there is some way to go on both counts, so if you are determined to sell up, you might want to do so, sooner than later. 

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