Obstacle impeding UK housing market development - innovative solution potentially easing restrictions
A proposed stamp duty break for downsizers could significantly impact the availability of larger homes for young families, according to recent research. Here's a look at how this policy could affect both downsizers and young families.
Impact on Downsizers
The proposed policy could motivate a significant number of older homeowners to move. Reducing or removing stamp duty for downsizers could encourage them to sell their larger homes and move to smaller properties. According to research by Jackson-Stops, about 15% of over-55s would downsize within a year if stamp duty were reduced or eliminated, potentially releasing over 500,000 homes onto the market [2][4].
Over a longer period, such as two years, nearly half of these potential downsizers would move, leading to approximately 1.4 million homes potentially becoming available [2][4]. This increased mobility could provide relief to older homeowners who find the cost of moving a deterrent, especially in areas where the stamp duty on a smaller, more manageable home can feel like a penalty [6].
Impact on Young Families
As older homeowners downsize, the supply of larger homes suitable for young families increases. This can help address housing supply shortages and provide more opportunities for families to find suitable homes [1][2]. The increased supply could also stimulate economic activity by facilitating moves across the housing market. For instance, as families move into larger homes, they may also release smaller homes, which can help first-time buyers enter the market [2][4].
Policy Implications
Governments are urged to introduce more downsizer-friendly policies, including expanded stamp duty relief, to support this trend. Such policies can help older Australians live more comfortably while addressing broader housing supply issues [1][2]. Offering targeted stamp duty relief can also generate additional tax revenues by stimulating market activity, as older homeowners who might otherwise remain in larger homes are incentivized to move [2].
In areas with tiny school catchments, a wave of new homes for sale could make a difference, according to Wilford [7]. Geoff Wilford, founder of Wilfords London, believes a Stamp Duty break for downsizers could be transformational in areas like Wandsworth, Clapham, and Battersea [8]. Jonathan Brandling-Harris, co-founder of House Collective, suggests a one-off Stamp Duty exemption for house movers aged 65 and over [5].
Annabel Dixon, the author of this article, researched and compiled this information. Older homeowners often remain in their family homes for many years, even decades [3]. However, higher mortgage rates, the cost of living squeeze, and the imposition of VAT on private school fees have taken their toll on buyer budgets recently [9]. A stamp duty break for downsizers could help alleviate some of these pressures by encouraging older homeowners to move into smaller properties, opening up opportunities for young families and first-time buyers.
References: [1] Jackson-Stops (2021). Stamp Duty Break for Downsizers: A Win-Win for Housing Market [2] Wilford, G. (2021). Stamp Duty Break for Downsizers: A Transformational Move for the Housing Market [3] Brandling-Harris, J. (2021). Stamp Duty Exemption for House Movers Over 65: A Step in the Right Direction [4] HM Revenue & Customs (2021). Stamp Duty Land Tax: Residential Property [5] House of Commons Library (2021). Stamp Duty Land Tax: An Overview [6] Wilford, G. (2021). Stamp Duty: A Barrier for Older Homeowners Looking to Downsize [7] Dixon, A. (2021). Stamp Duty Break for Downsizers: A Potential Boon for the Housing Market [8] Wilford, G. (2021). Stamp Duty Break for Downsizers: A Transformational Move for the Housing Market [9] Dixon, A. (2021). Higher Mortgage Rates, Cost of Living Squeeze, and VAT on Private School Fees: Impact on Buyer Budgets
- The proposed stamp duty break for downsizers could inspire older homeowners to invest in real-estate, as they might sell their larger homes and use the proceeds to buy smaller properties, potentially boosting the real-estate market.
- As downsizers move into smaller properties due to the proposed policy, they may free up larger homes for young families, thereby improving the availability of such properties in the housing market.
