Partner Luke McMath, in our Residential Property team, looks at the calls for Stamp Duty (SDLT) changes designed to encourage more older homeowners to move and downsize, to make more family sized homes available to buyers.
Insurance company Saga recently reiterated calls for older homeowners to be exempt from paying Stamp Duty when looking to move and downsize.
The company suggested that removing Stamp Duty for retired homeowners would make moving and downsizing more attractive and keep the housing market moving. Particularly when it comes to increasing the availability of larger, family sized homes.
In a survey, Saga found that 73% of those aged over 50 would support the move. It also showed that 25% of retired homeowners felt that costs including Stamp Duty were a deterrent when it comes to downsizing.
It was suggested that for some, downsizing is viewed as a more attractive and lower risk alternative to options such as equity release. Downsizing may also provide homeowners with an additional income to fund their retirement.
Critics of the proposal argue that homeowners in the ‘baby boomers’ generation stand to have made sizeable gains, with property prices having risen dramatically in recent decades, and that they will escape paying both Stamp Duty and Capital Gains Tax on their main residence, leaving HMRC out of pocket. The government has already acknowledged the concerns caused by downsizing in the legislation granting the Residential Nil Rate Band.
What would the potential saving be?
Stamp Duty is determined based upon the value of a property being purchased (in this case, to downsize to). Example potential SDLT savings based on current figures would be:
|
Value of property being bought to downsize to |
Potential Stamp Duty saving |
|
£250,000 |
£2,500 |
|
£400,000 |
£10,000 |
|
£500,000 |
£15,000 |
|
£750,000 |
£27,500 |
|
£1,000,000 |
£43,750 |
|
£1,500,000 |
£93,750 |
|
£2,500,000 |
£213,750 |
Note that these figures only apply to those owning a single property. For those owning more than one property, a SDLT surcharge would apply. This would mean SDLT of £10,000 being payable on a home valued at £250,000, £30,000 on a home valued at £500,000 and £73,750 one a home valued at £1,000,000 for example.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
