Stamp duty prevents 1m downsizing
MORE than one million pensioners would be encouraged to downsize if the Government offered them an exemption on stamp duty, research has found.
Ministers, peers and think tanks are urging Philip Hammond, the Chancellor, to cut the duty – dubbed a “tax on moving” – in his autumn Budget. The Daily Telegraph has campaigned for the tax to be reviewed.
Baroness Altmann, the Tory peer and former pensions minister, said: “Many older people realise the house they are living in is probably too big for their needs, but the biggest barrier is the cost of moving.
“Stamp duty acts as a significant deterrent. Anything that the Government can do that will encourage them is beneficial.
“That will free up accommodation for growing families and also mean that more people will be able to live independently as they get older. A stamp duty holiday for older people who recognise they want to move would definitely free up some of the log-jam in the property market that is hampering families from moving up.” The research
by Yougov on behalf of retirement house-builder Mccarthy & Stone found that 1.2 million pensioners would be prepared to move if they didn’t have to pay stamp duty. It comes after a Cabinet minister said that stamp duty should be reformed because it exacerbating the housing crisis.
A lack of housing for younger Britons is one of the most serious political problems facing the Conservatives. Many senior Tories believe that Theresa May, the Prime Minister, must address the issue if she is to match Labour’s popularity among young voters.
Experts suggested that scrapping stamp duty for pensioners would also boost Treasury receipts due to increased activity in the housing market.
Research by the Institute of Public Care found that if the stamp duty exemption for pensioners led to just 10 per cent more transactions, the Treasury would raise an extra £186million.
This is due to other tax revenues generated in the course of moving and stamp duty picked up further down the chain. Henry Lumby, head of retirement living at Savills, said: “We have Help to Buy to help first-time buyers get on the ladder, we need something to encourage people to move from their homes and free up housing stock.”
In Australia, 13 per cent of older people live in retirement communities, while in the UK less than five per cent do. This is partly due to a shortage of suitable homes to move into in the UK, but also some states in Australia have either reduced or no stamp duty for pensioners.
Paula Higgins, chief executive of the Homeowners Alliance said: “Scrapping stamp duty for last-time buyers is an obvious way to encourage downsizing – although attention must also be paid to the availability of suitable houses to downsize to.”
According to Savills’ research there is currently a deficit of 1.4million retirement homes in the UK, if 15 per cent of the older population was to downsize.