Lords weigh in on scrapping Stamp Duty for downsizers

Posted: 14/1/2024

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Stamp Duty payments for elderly buyers looking to downsize should be scrapped in a bid to ease the housing crisis while those who own a second home should be financially penalised, a new report commissioned by the Family Building Society suggests.

The report, from the London School of Economics and University of Sheffield and sponsored by Lord Mandelson and Lord Heseltine, argues that older residents are often less likely to downsize due to a lack of financial incentives spurred on by high moving costs and the payment of Stamp Duty on their new home.

CURRENT DEMAND

According to the report, the UK’s housing shortage cannot be dealt with simply by building more homes, detailing that current housebuilding targets will struggle to absorb the current demand alongside the predicted increase of 1.6 million households forecasted over the next 10 years.

Stamp duty is charged at 5% between £250,001 and £925,000, starts at £425,000 for first-time buyers, and rises to 12% for properties exceeding £1.5million.

Lord Mandelson, former first secretary of state, says in the report: “Stamp Duty Land Tax can be changed easily and its impact, as seen during the pandemic holiday, can be enormously beneficial in overall economic terms. It just requires a little creative thinking from the Treasury.”

LANDLORDS

Stamp duty for landlords is charged at 3% up to £250,000, as they are included in the "second home" category. There has been an ongoing campaign to reform this and scrap the tax as it has contributed to a reduction in the number of rental homes available, and increased rents. The government have shown no real signs however that they intend doing so. Even scrapping it up to £150,000 would help the social housing sector. 

 

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