Hunt urged to help downsizers
Pressure on Chancellor to reduce stamp duty for older homeowners
CHANCELLOR Jeremy Hunt is under pressure to galvanise the moribund housing market – and revitalise the Tories’ poll ratings – by cutting stamp duty when he delivers his autumn statement next month.
With house prices forecast to continue falling until 2025, lenders are lobbying for a cut in the tax paid when buying a house – and argue that Mr Hunt should focus in particular on older homeowners who are considering downsizing.
Aides to the Chancellor – who will deliver his statement on November 22 – say the economic projections produced by the Office for Budget Responsibility (OBR) will limit the scope of any tax cuts to measures which are ‘both affordable and not inflationary’, which rules out income tax cuts but leaves the door open to stamp duty changes.
Stamp duty, which is charged at 5 per cent between £250,001 and £925,000 – it starts at £425,000 for first-time buyers – and rises to 12 per cent for estates exceeding £1.5million, raises £14billion for the Treasury annually, equivalent to two per cent of its total tax take.
The Government has previously introduced stamp duty holidays, raising the threshold to £500,000 during the Covid crisis in 2020.
Sir Nigel Wilson, group chief executive of the Legal & General financial services firm, argues in today’s Mail on Sunday that with a million people on a waiting list for homes, older homeowners in properties larger than they need – typically because their children have flown the nest – should be encouraged to sell to free up space for younger buyers looking for family-sized homes. There are millions of unused bedrooms in British homes.
‘Moving is expensive and being forced to pay stamp duty to buy a new home for retirement only adds to the barriers that keep older people in properties that are no longer suitable,’ he writes, adding that the practical difficulties for the Treasury ‘could be overcome if axing stamp duty – or reducing it – was limited to those who move into an “integrated retirement community” with self-contained accommodation, communal facilities, care and domestic services. Also, there could be a minimum qualifying age.’
Lloyds Banking Group predicts that house prices will drop by 4.7 per cent this year and by a further 2.4 per cent in 2024 before recovering in 2025. The time taken to sell a home has risen from 33 days last year to 55 days, as potential buyers have been deterred by rising interest rates.
In 2019, Saga, the organisation for the over-50s, called for pensioners who want to downsize to be allowed to move once without needing to
pay stamp duty. Former Cabinet minister Damian Green revived the idea earlier this month at the Conservative conference, telling delegates: ‘If you’ve got a big fivebedroom house you will be able to sell it for a lot of money, but there’s no point selling it if you can’t spend that money on something that will be convenient for you,’ he said.
‘Having had all these schemes for first-time buyers, why don’t we have schemes for last-time buyers. Perhaps no stamp duty if you are downsizing to something and releasing a family home – why not give you some kind of incentive to actually do that?’
Nine out of ten people aged over 65 live in ‘under-occupied’ homes, amounting to a third of all properties. While a total of four million older people want to move home, only around a fifth of those aged over 50 expect to be able do so. Housing policy will be a key battleground in next year’s General Election after Labour vowed to build 1.5 million new homes within five years of taking power and build entirely new towns.
Party leader Sir Keir Starmer has said he will ‘get Britain building again’ by bulldozing through the planning system and ‘fighting the blockers’. He dubbed himself a ‘Yimby’ (yes in my back yard). Labour has also said it will review the rules on green belt restrictions as a way to allow more houses to be built, with Sir Keir describing ‘dreary’ green belt land such as disused car parks as ‘grey belt’.
The Government watered down plans to build 300,000 new homes annually after pressure from backbench MPs concerned about the impact on the countryside. A Whitehall source said: ‘A tax incentive to downsize is an attractive policy idea, although there are question marks about how it would be implemented. It is also hard to see where the money would come from to pay for it, so this is more likely to be a conversation to be had before next year’s Budget.’