Stamp duty should be scrapped for over-75s so they are encouraged to downsize and free up family homes for younger buyers, according to the boss of a major retirement home builder.
England’s property transaction tax is a “handbrake” stopping older people from moving house when they want money to fund their care needs according to Will Bax, chief executive of Retirement Villages Group.
He said: “We need to make it easier for people [to downsize]. The issue that always comes up is stamp duty as a handbrake to that decision.
“My personal view is stamp duty should be eradicated for anyone aged 75-plus, particularly if they move into a supported setting.
“If we can move a material number of older people into those kinds of settings. You start to solve the housing crisis and the social care crisis. And I can’t think of two more important issues to solve in Britain today.”
There has been a surge in under-occupation over the past few decades, driven largely by people living in family homes long after their children have moved out.
Between 2017 and 2022, the number of homeowners with at least two spare bedrooms jumped by 950,000 to 8.25 million, according to the English Housing Survey.
This means there were more than 16.5 million unused bedrooms in owner-occupied homes across England.
Stamp duty is paid on the purchase price of a property in England and Northern Ireland. It is charged in bands, starting at 5pc for the value of a property between £250,000 and £925,000, rising to 12pc for values above £1.5m.
Mr Bax said stamp duty is a particular disincentive for older people because their changing needs mean they might not be able to live in a new home for a long time, and they are trying to save money in case they need to pay for future care.
He said: “The psychology of the older person needs to be understood in that equation. They are giving money away that they could be using either to fund their health needs in the future, or passing on as legacy to the next generation.”
Because stamp duty is taxed in bands, house price rises have triggered disproportionate increases in stamp duty bills, meaning the tax has increasingly become a barrier to moving house.
In September 2022, then-chancellor Kwasi Kwarteng raised the nil-rate stamp duty band from £125,000 to £250,000 in England and Northern Ireland.
The move brought the nil-rate threshold roughly in line with house price growth since it was last adjusted in 2006, and was one of the only policies not reversed when Jeremy Hunt took over as Chancellor weeks later.
But there was no adjustment for the higher rate bands, which are more punitive.
A buyer purchasing an average London home in March this year would have had to pay £12,500 in stamp duty. A person buying a £1m home would have had to pay £41,250.
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2024-05-27 11:02:00Z
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