Merryn's Blog

Getting lucky in the property market is not 'providing for a long retirement'

Those lucky enough to be “asset-rich and cash-poor” might be better off selling up and using the money to fund their retirement, says Merryn Somerset Webb.

150324-brian-sewell

In the Telegraph this week, art critic Brian Sewell writes about his "biggest financial fear". It is the mansion tax. If it goes through as Labour suggests, he says, it "would more than wipe out my annual income, and were I to live another decade, leave the house burdened with an enormous debt, compelling its sale."

It would he says, make him and thousands his age "wretched with anxiety", given that they are asset-rich and cash-poor and it would "attack the provident who instead of spending as they go have looked to the future and made provision for a long retirement, rather than depend on the state to rescue them from poverty". I can see a lot of these points.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Regular readers will know that, just like Cheryl Fernandez-Versini, we are very against the idea of a mansion tax. It's badly thought out; it would be an administrative nightmare; it would be an additional tax rather than a replacement tax; and of course it would soon be extended down the house-price league tables until everyone was paying it on their garden sheds.

But there is one point in Sewell's objection list that doesn't ring quite true the claim that those who are asset-rich and cash-poor have "made provision for a long retirement". Many will have done their best to do so, but he doesn't appear to have done anything of the sort.

Advertisement
Advertisement - Article continues below

If his main asset really is his large Wimbledon house, he hasn't "made provision for a long retirement", he's merely been lucky enough to benefit from one of the greatest asset bubbles of all time.

And making provision for a long retirement today wouldn't involve attempting to hang on to his house until his death and passing it on to his heirs without an "enormous debt". It would involve selling the house and using the cash to create a long-term sustainable income.

Advertisement

Recommended

Visit/519223/how-can-we-raise-more-money-in-tax
Economy

What are the best ways of raising more money in tax?

Given that whoever wins next week's election will be going on a massive spending spree, we're going to need to raise at least some of that money throu…
5 Dec 2019
Visit/518715/what-are-the-biggest-mistakes-investors-make-when-it-comes-to-tax
Investment strategy

What are the biggest mistakes investors make when it comes to tax?

The tax implications of an investment are something we rarely consider until after the event. That could prove to be an expensive mistake, says Domini…
27 Nov 2019
Visit/516603/how-tax-has-shaped-the-course-of-human-history
Economy

How tax has shaped the course of human history

Taxation is as old as civilisation itself. But how much is too much? Dominic Frisby looks at how taxation, war and society have evolved together over …
16 Oct 2019
Visit/personal-finance/equity-release/600780/equity-release-how-to-tap-your-house-for-cash
Equity release

Equity release: how to tap your house for cash

The pros and cons of releasing equity from your home compared with moving to a smaller one
10 Feb 2020

Most Popular

Visit/economy/inflation/600799/federal-reserve-inflation-money-printing
Inflation

Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Visit/investments/investment-strategy/600804/the-secret-to-avoiding-being-panicked-out-of-your-portfolio
Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020
Visit/economy/600796/money-minute-monday-10-february-lacklustre-growth-in-the-uk-and-europe
Economy

Money Minute Monday 10 February: lacklustre growth in the UK and Europe

Today's Money Minute looks ahead to the week's GDP growth estimates for the UK and the eurozone, plus inflation figures for the USA.
10 Feb 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019