Stamp duty: is it strangling the property market?
By Simon Hacker | 6th November 2023
Stamp duty burdens are placing a handbrake on home-moving decisions for millions of homeowners, according to a new report.
Wealth managers Hargreaves Lansdown (HL) say latest government figures on transactions point to 22% of older homeowners who would like to downsize being priced out of a potential move through fear of the costs being simply too high.
Stamp duty land tax (SDLT) is currently charged at 5% for homes valued between £250,001 and £925,000 with that cost then stepping up, via a 10% bracket, to 12% on properties worth more than £1.5 million.
Helen Morrissey, HL head of retirement analysis said: "The costs associated with a move will soon eat into any profit you may make from a sale."
She added: "Stamp duty is one such cost that can run to tens of thousands of pounds and really erode your purchasing power. If you rely on downsizing too heavily to plug gaps in your pension planning you may find yourself having to make tough decisions further down the line."
More than a quarter of homeowners now want to downsize in retirement in order to own more manageable properties and free up cash, HL says.
Reacting to HL's report on This Is Money, one homeowner said: "Moving to downsize costs too much. Stamp duty, agents fees, lawyers fees, survey fees, when moving in. If they want my home for a large family, then I need an financial incentive, not a savings draining penalty, I need to heat and eat while living in a home that is fitted to my taste and standards. Until there is an incentive I will live with four empty bedrooms, two unused sittings rooms plus an unused conservatory with a very large garden that I cannot manage."
HL's stance comes amid speculation that there may be changes to stamp duty in the forthcoming autumn statement as a bid to reverse polling trends towards Labour.
● Government figures released in January suggest residential stamp duty payments raised about £10.1 billion for the Treasury during 2021-22. However, this revenue source is understood to have fallen markedly in recent months, while revenue from inheritance tax has increased to around £6bn.
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