The stamp duty tax in the UK has received a lot of criticism, many of it justified. It was recently been revealed that almost half of the retired population in the UK who own a home, would consider, or would be encouraged to move if they were offered a lower stamp duty.
Numerous experts have suggested that pensioners who are looking to downsize should pay less property tax as this would then encourage them to move a small home, therefore freeing up family sized properties for those who need them. It is certainly one rational solution to solve the current UK housing crisis. New research indicates that at 48%, almost half of the estimated 5.7million pensioners are interested in downsizing, a rise of some 4%, equal to 300,000 compared to just one year ago. This figure is expected to rise to more than 11million by 2036.
It was also revealed that 1.2million extra adults aged 65 and over would be encouraged to move with a stamp duty exemption when downsizing to further stimulate activity within the housing market. Such a downsizing boom would release homes worth a combined £720 billion and people expect to release £80,000 of equity on average when downsizing. This would total £450 billion. The rise in the number of people looking to downsize was always going to be an inevitable outcome of the UK’s rapidly ageing population. Within the next two decades, those aged 65 and over are expected to grow by almost 50%, this will expose the UK’s highly inadequate level of suitable housing for older people if the country is to maintain the current status quo.
Over 11 million people are currently considering moving to a more suitable property within the next 20 years, so it is essential that the Government puts specialist retirement housing and various other forms of accommodation for the older generation higher up the agenda. If not, the country will lack the required infrastructure and support services, especially from a health and social care perspective, to handle such a demographic shift. Preparing properly here is vital.
Government schemes such as Help to Buy, aimed at first time buyers have certainly spurred market supply of homes at that end of the spectrum, however, this has done little to nothing to aid the housing choices of those in later life. Hence, a strong planning policy presumption in favour of retirement housing and other forms of suitable housing for the ageing population is needed.
It is a common belief that those nearing retirement, or those already retired are discouraged by the lack of suitable housing, as well as the cost. With this, it is believed that a stamp duty exemption would make the process more attractive. Figures indicate that over a million more older people would be encouraged to move if stamp duty was to be lowered, or even scrapped, for those looking to downsize. If moves at the top end of the housing chain are encouraged, activity will be stimulated and millions of family homes will be released onto local markets and help younger people move up the property ladder.