Downsizers are the last people who deserve a tax break

The Tories seem to have twigged that if you tax the young to smithereens yet offer them no realistic hope of ever owning the roof over their heads, they may become disillusioned with a system that clearly isn’t working for them.

The One Nation caucus, a group of 107 Conservative MPs, has proposed a solution: Jeremy Hunt should abolish stamp duty for homeowners looking to downsize to “free up” housing stock for the young. At present, stamp duty is charged at 5pc of the value of a property between £250,001 and £925,000, with first-time buyers exempt up to the value of £425,000.

There are more than 3.6m homes with at least two spare bedrooms owned by people over the age of 65, according to the 2020- 21 English Housing Survey.

The proposed policy makes sense on the face of it. But is offering yet another tax break for boomers really the way to a) fix the housing crisis and b) soothe the country’s seething generational divides? I’d argue no.

Consider that half of the total housing wealth in the South West of England is owned by those over 65, according to research conducted by Savills.

Those elderly homeowners took advantage of the surge of home ownership in the latter part of the 20th century, the soaring house prices since and have, in the most part, reached the point where they have paid off their mortgages. Is this really the group that requires a tax cut?

It certainly wouldn’t be the first time older people have benefited from tax advantages and support unavailable to younger generations.

Boomers went to university and emerged debt-free with most receiving grants to cover their living costs. A far cry from the situation for today’s students who stare down an average debt of £45,600 with 7pc interest applied and repayments that could stretch over 40 years.

Meanwhile, boomers who borrowed money to buy houses between 1983 to 2000 enjoyed mortgage interest relief at source which offered a significant cushion that meant borrowers received relief on as much as 25pc of the interest owed on their home loans.

The untouchable triple lock has seen pensions increase faster than wages, benefits and inflation. In just two years, the state pension rose by almost 20pc while Millennial and Gen Z workers felt the bite of stagnating wages and rampant inflation.

Pensioners don’t pay national insurance on pensions or earnings, get winter fuel allowance, free bus travel, the list goes on and on. In contrast my generation and the Gen Z-ers coming up behind me are taxed at unprecedented levels, have student loan repayments taking chunks out of our take-home pay, face crippling childcare costs (if we can afford to have a baby in the first place), and shell out on sky-high rent that stop many from being able to scrape together a deposit for a starter home.

So forgive me if I’m not in a rush to applaud the older generation getting yet another tax break courtesy of this Government, which bestows beneficial policies on the over-65s knowing that they’ll potter down to the polls to reward them on election day with a vote.

But the question of whether it’s fair or not doesn’t really matter after all. The key question is: would it work? Would scrapping stamp duty for downsizers fix the housing crisis? The evidence suggests it wouldn’t do much – and could actually make things worse. The stamp duty holiday during the pandemic brought in significant price increases, bidding wars and left people potentially exposed who had over borrowed when mortgage rates later rose.

Experts say that the reason older people aren’t downsizing is not because of cost, but because there’s a chronic shortage of suitable housing for elderly people. They often, understandably, want to stay close to friends and family. They want single level homes where they won’t need to negotiate stairs, and not everyone wants to live in a retirement village – or can afford the high service charges.

Older people are not immune to the universal housing issues in this country: houses are in low supply and high demand and what’s available is unaffordable. The real answer, as it so often is when it comes to the nightmarish housing situation that has this country in a choke hold, is to build more houses.