‘Stamp duty is a huge disincentive for downsizers’

David Forcey, 79, has lived in a five - bedroom house in south-west London with his wife for 35 years. To downsize from their £2.5m home to a £2m one, the retired couple face an effective stamp duty tax rate of 7.5pc, requiring them to sign a £ 150,000 cheque for Chancellor Jeremy Hunt.

Last week Telegraph Money reported on how stamp duty was strangling the housing market – forcing first-time buyers to borrow more and discouraging older homeowners to downsize. Chancellor Jeremy Hunt is said to be considering increasing the nil-rate threshold from £250,000 to £300,000.

Mr Forcey said the tax is preventing people from downsizing and freeing up family homes. “This argument about us ‘elderly’ people being bedroom blockers, I do understand. There are lots of young people on our street in their 40s with small children. So this could be a great family home.

“But stamp duty is a huge disincentive to move. It’s a very unfortunate tax.

“Our children tease us as the lucky generation, but we were paying 16pc interest rates on these homes once.”

Mr Forcey thinks a better way to tax property owners would be on the capital gain they make. “We’ve been here for 35 years. I appreciate that we’ve made a big capital appreciation which is tax free. So at a lower level, there should be some sort of capital gain to pay.”

But as long as current stamp duty thresholds and rates remain, the couple will continue to resist moving.

Sharon Scott agrees with the Forceys. The 68-year-old is a southerner at heart but moved to Yorkshire 20 years ago after becoming a single parent.

Now, her children are back where she began – sprawled across north London, Bedfordshire and Surrey – so she wants to move closer to them. Especially since becoming a grandparent. To buy a similarly-sized house to what she lives in now, but in Hampshire, Ms Scott and her husband would have to swallow a £90,000 stamp duty bill.

If they were to downsize from a four- bedroom to a less spacious, three-bedroom detached house with a garden, they would still need to set aside over £11,000 for the transaction tax. As a result, they have put their hopes of moving on hold.

The mother- of- two, who is also a stepmother, said: “This house we’re in now, if you moved it to the South East, would be worth £1.5m. Here, it’s worth nothing like that. So, we have no choice but to downsize if we do move. But unless you have oodles in the bank, you’ve got to move within the envelope of what your house sells for. We’re already limited, moving from a cheap to more expensive area.

“People simply don’t have the money up here once they’ve retired, especially in Yorkshire. If we’re downsizing, we shouldn’t have to pay stamp duty at all. It’s an insidious tax. To pay tax to move is awful. It stops social mobility.”

Ms Scott, who used to work for a home-buying solicitor, is wary of temporary tweaks to ease the tax burden like Rishi Sunak’s stamp duty holiday – when the starting point of stamp duty was temporarily raised to £500,000 in England during the pandemic. She said: “When the Government does anything, estate agents jump on it and house prices go up. Nobody saves.”

A third Telegraph reader, who asked to remain anonymous, lives in Surrey, where house prices have risen significantly over the past 15 years. His house is worth £1.8m, and the type of house he would want to move to now costs £2.2m. The stamp duty bill on such a property would be £175,000.

He said: “We are now trapped, as there is no way at all we’ll give the Government that much again. It boils down to several years’ income or a lifetime of private school fees.”

In Northern Ireland, stamp duty applies as in England. But other parts of the UK have different thresholds which are even more damaging to housing market fluidity.

In Scotland, a “land and buildings transaction tax” replaced stamp duty in 2015. In Wales, a “land transaction tax” was brought in six years ago.

Some in the industry have suggested that sellers, rather than buyers, should foot the bill.

London estate agent Simon Gerrard, of Martyn Gerrard Estate Agents, said: “By reversing the tax, the Government could inject some much- needed flexibility into the market, supporting first-time buyers on to the property ladder and incentivising older homeowners to downsize.”

Ruby Hinchliffe

Telegraph reader David Forcey, 79, and his wife have lived in their home for 35 years