Down­siz­ing could be ac­tively en­cour­aged

Buckinghamshire Advertiser - - BUCKS PROPERTY -

WHAT im­pact will rais­ing the in­her­i­tance tax thresh­old have on the prop­erty mar­ket?

In the Sum­mer Bud­get, the gov­ern­ment an­nounced it would in­crease the thresh­old on in­her­i­tance tax to £1 mil­lion for mar­ried cou­ples and those in a civil part­ner­ship by 2020/21, phas­ing in the ad­di­tional re­lief from 2017/18; re­flect­ing the ex­tent to which hous­ing con­trib­utes to pri­vate wealth in the UK.

In­deed Sav­ills’ anal­y­sis sug­gests the over 65s hold roughly 44% or £1.2 tril­lion of the eq­uity held in owner oc­cu­pied hous­ing.

The in­crease of the in­her­i­tance tax thresh­old may dis­cour­age peo­ple from down­siz­ing (al­though the re­lief for those choos­ing to down­size is pro­tected).

This will re­sult in the un­de­r­oc­cu­pa­tion of fam­ily homes and is likely to fur ther im­pact the quan­tity of fam­ily hous­ing com­ing to the mar­ket. As a re­sult, it is likely to un­der­pin house prices – es­pe­cially across the South of the coun­try where his­tor­i­cally the IHT bur­den has been high­est.

It also means that younger gen­er­a­tions who may rely on the re­lease of this eq­uity to move on or up the hous­ing lad­der will not have ac­cess to it un­til ma­ture home­own­ers pass away and at a later stage in their own lives.

Ac­tively en­cour­ag­ing down­siz­ing in other ways, with the in­tro­duc­tion of re­lief on stamp duty for ex­am­ple, may ease this sit­u­a­tion. As would in­creas­ing the stock of good qual­ity retirement hous­ing.

It is with this in mind that Sav­ills has launched Retirement Liv­ing, a new ser­vice stream de­voted to the retirement sec­tor.

The team is the first of its kind for a UK prop­erty com­pany and in­cludes de­vel­op­ment, plan­ning and health­care spe­cial­ists.

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