Advertisement

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
Brian Sewell: might be better off selling up and using the cash to fund a long retirement

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."

Advertisement - Article continues below

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.

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.

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
Advertisement

Recommended

What are the best ways of raising 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
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
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
OBR: UK house prices could fall by 12% next year
House prices

OBR: UK house prices could fall by 12% next year

The Office for Budget Responsibility says UK house prices could fall by as much as 12% next year. John Stepek looks at how likely that is.
14 Jul 2020

Most Popular

Three ideas for Lloyds Bank's new boss
UK stockmarkets

Three ideas for Lloyds Bank's new boss

The Black Horse needs whipping into shape. A change at the top provides a great opportunity, says Matthew Lynn.
12 Jul 2020
We’re spending more than at any time since World War II – how will we pay it back?
UK Economy

We’re spending more than at any time since World War II – how will we pay it back?

With the UK spending vast sums on stimulus measures, this year’s budget deficit will be greater than at any time since World War II. The big question,…
14 Jul 2020
Why the moving average is my favourite charting tool
Sponsored

Why the moving average is my favourite charting tool

Traders and technical analysts use "moving averages" to iron out daily fluctuations and give a much clearer picture of a market's direction. Dominic …
13 Jul 2020