Stamp duty is stopping older homeowners from downsizing and closing millions of bedrooms from the housing market as Britain’s population ages.
In any case, Telegraaf Geld explained how this week one million bedrooms have been excluded from the housing market in the past five years as Britain’s older homeowners stay in single-family homes long after their children have fledged the nest.
The problem will only get worse as the number of over-65s rises from 11 million to 13 million over the next decade.
Still, experts and older homeowners have warned that the government’s excessive stamp duty policies are deterring retirees from downsizing.
Jonathan Stinton, of the Coventry Building Society, a lender, said: “There is no tax incentive to make cuts. There has to be a rush. People who need single-family homes will be left out as more and more homes are underoccupied.”
Rozi Allen, 59, lives in London with her husband. “We have a 3,500 square foot house that we needed when we had four kids at home. Now two of them have a job and two are studying at university. We have some Ukrainians staying with us, but they will leave. We don’t really need the space – we are cold and would like to move.”
But they will remain for now, because of the stamp duty.
Ideally, the couple would have been happy to make an interim move to a terraced house in London for around £1.4 million before moving permanently to the countryside. This would come with a tax bill of £81,250. If they later moved to a cottage outside London for around £1.2 million, they would pay a further £61,250 in stamp duty – a total bill of £142,500.
“I am happy to pay another piece of stamp duty, but because of the tax, we only take one step, not two. That means this family home will be released five years later than it could have been,” Ms. Allen said.
“Even with today’s energy costs, the stamp duty on the temporary home would exceed the cost of running the larger home during those five years,” Ms. Allen said.
The government should allow anyone over the age of 55 to offset the stamp duty of a downsizing against the stamp duty bill of a future move, Ms Allen said. “Then people would leave the family homes sooner.”
It would also increase the Treasury’s tax receipts. If Mrs. Allen paid stamp duty on the first move and could offset it against the second move, the Treasury would receive a total of £81,250 in tax. Without this incentive, Mrs Allen and her husband will move into the cottage alone, meaning the Treasury will be just £61,250 – 33 per cent less.
People now live much longer in their homes than before. In 1988, a typical homeowner moved every nine years, according to real estate website Zoopla. In the first six months of 2022, the difference was 21 years.