Downsizers in the UK stand to save almost £5,000 – rising to £16,000 in London – if the Government succumbs to pressure to scrap Stamp Duty for downsizers in the upcoming Spring Budget on 6th March, according to Reallymoving.
Reallymoving has analysed downsizer sale and purchase prices over the last year to reveal the average amount of equity they release and the typical Stamp Duty bill. Stamp Duty is charged at 5% on the proportion of a home’s value between £250,001 and £925,000 – rising to 12% for the proportion of a home’s value over £1.5m.
Selling for an average of £464,870 and buying for £348,735, downsizers in the UK typically release £116,135 of equity by moving to a cheaper property than the one they’re selling, assuming their mortgage is paid off, footing a Stamp Duty bill of £4,937 in the process.
Downsizers in London, pocketing an average of £138,982 by moving to a cheaper home, stand to save £15,972 if the Government decides to scrap the transaction tax, while those in the South East would save £8,736. The average downsizer in the North East would not stand to benefit from the proposed change, as the typical purchase price sits beneath the £250,001 Stamp Duty threshold. If the Welsh government followed suit, homeowners downsizing in Wales would save £1,472 on average.
What’s more, downsizers traditionally account for around a third of home movers, but in January 2024 their market share dipped to 27%, compared to 35% just six months ago (July 2023).
The cost of moving home currently stands at £14,458 including Stamp Duty, estate agent fees, conveyancing, a survey, an EPC and removals costs, making it a significant factor in the decision making of older homeowners who are considering moving to a smaller, more manageable home once their families have flown the nest. Founder and CEO of reallymoving, Rob Houghton, said:
“There was more downsizer activity during 2023 than at any point since 2015, but their market share has dropped off by around a quarter since July. With transaction volumes still low due to the impact of inflation and higher mortgage rates, the Government may well be tempted to get the market moving and increase the supply of family homes by incentivising homeowners at the top of the ladder to move to smaller properties.
Thanks to price gains over the longer term and years spent paying down the mortgage, moving to a smaller home will give most downsizers a large chunk of equity – £116,000 on average. That will go a long way towards funding living costs in retirement and also enable people to pass wealth on to their children and grandchildren if they wish, in turn helping more First Time Buyers onto the housing ladder.”
