Stamp duty should be eliminated for individuals over 75 to encourage downsizing and make more family homes available for younger buyers, according to Will Bax, CEO of Retirement Villages Group.
England’s property transaction tax acts as a “handbrake” preventing older adults from moving when they need to free up funds for care, Bax argued. He said:
“We need to simplify the downsizing process. Stamp duty is a significant barrier to this decision.”
Bax advocates for the removal of stamp duty for those aged 75 and above, particularly when they move into supported living settings. He stated:
“Transitioning a substantial number of older adults into these settings could address both the housing and social care crises, two of Britain’s most pressing issues.”
The trend of under-occupation has surged over the past decades, largely due to empty nesters remaining in their family homes. From 2017 to 2022, the number of homeowners with at least two spare bedrooms increased by 950,000 to 8.25 million, resulting in over 16.5 million unused bedrooms in owner-occupied homes across England, according to the English Housing Survey.
Stamp duty starts at 5% for property values between £250,000 and £925,000, rising to 12% for values above £1.5 million. Bax highlighted that the tax is a significant deterrent for older adults, who may not reside in their new homes for long and need to conserve funds for future care needs. Bax explained:
“The older generation’s psychology needs to be considered. They are reluctant to part with money that could fund future health needs or be passed on as a legacy.”
In September 2022, then-chancellor Kwasi Kwarteng raised the stamp duty nil-rate band from £125,000 to £250,000, aligning it with house price growth since 2006. This change was maintained when Jeremy Hunt became Chancellor, but higher rate bands remained unchanged, leading to increased burdens for higher-value property transactions.
2 responses
An argument can be made to remove SDLT from a lot of society groups so advocating for this section of society is not surprising. I do agree that SDLT should certainly be removed from those buying retirement flats and the like. However, each time I act on one of these, I am minded to also question why pensioners on a fixed income are paying such exorbitant ground rent fees with escalators that are more harsh than normal Leasehold.
It would be good if certain types of property was freed up but can these be purchased at the moment? Do the mid 40’s group with 2 children have the funding available to upgrade from a 3 bed house to a 4 bed house that may cost an additional £100k say? I do not think that people’s finances can cope at present.
SDLT without a shadow of a doubt needs a complete overhaul. Whether or not this is at the top of the list of priorities is another matter.
The stamp duty element acting as a deterrent is certainly a main factor in our wish to move from our 4 bedded house to a more sensible option for us.We are approaching our mutual 80th birthdays and so a quick resolution to this factor is desirable.The detail of such a removal of this deterrence in regard to the type of property we would select is open to debate,the cost of retirement properties and ongoing fees for instance seem again designed to put anyone off choosing this type of accomodation.
Again,the removal or alteration of these penalties would encourage us to free up our large property for the enjoyment of a more deserving demographic.