The One Nation Caucus, a group of 107 Conservative MPs, have joined calls for stamp duty reform ahead of the Chancellor’s Spring Budget on March 6th. Chairman of the centre-right parliamentary group, Damien Green, argued earlier this week that abolishing the tax for homeowners looking to downsize would free-up available housing stock for the young.
Currently, the cost of stamp duty remains one of the most significant obstacles to downsizing amongst homeowners over the age of 55, according to research from later-living provider Pegasus.
David Hannah, Group Chairman of Cornerstone Tax, the nation’s leading property tax advisory, welcomes the calls from senior Conservative MPs to reform SDLT whilst urging the need for the creation of incentives at the lower end of the market as a means to “grease the gears” of the UK’s struggling property market.
According to David Hannah, one easy fix for policymakers would be to reassess the current thresholds for stamp duty payment, homes that are valued at £250,000 or less are currently exempt, with a 5% levy being charged on homes valued between £250,000 and £925,000.
However, with the current price of a UK home standing at £288,000, it’s clear that SDLT payment bands are long overdue an overhaul. According to Hannah, those looking to purchase properties on the mid-to-high end of the property market will, in turn, have a chance to sell their low-end properties as a result of an increase in demand from prospective buyers, encouraging movement and generating momentum within Britain’s frozen housing market.
Exclusive data from Cornerstone Tax reveals the current plight of prospective first-time buyers, with 53% of Millennials claiming that they were unable to save for a deposit on their current salary. Whilst 52% of Millennials can no longer afford to live in their desired location as a result of rising costs. David Hannah argues that a targeted effort to free-up existing housing stock through smart reforms to stamp duty will necessarily result in a drop in asking prices as homeowners on the low-to-mid ranges of the market are encouraged to sell their property.
David Hannah, Group Chairman of Cornerstone Tax, said, “Abolishing SDLT for downsizers won’t have much impact in isolation, policymakers must ensure that an overhauled stamp duty regime works for all participants within the market.
“As our own research shows, over half of millennials are unable to save for a deposit on their current salary due to the distorted value of UK homes.
“The typical first-time buyer isn’t looking at the high-end homes that are currently occupied by over 55s. Instead, they’re looking towards the low-to-mid ranges of the market, where SDLT payment bands have been outdated for years because they have never been index-linked to house price inflation.
“As we all know, a rising tide lifts all boats, those looking to purchase properties on the mid-to-high end of the property market will now have a chance to sell their low-end properties as a result of the increase in demand from prospective buyers, contributing to further momentum within the housing market.”
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