According to recent research, the scrapping of Stamp Duty for those downsizing their property could help to free up larger homes for families and boost transaction levels throughout the property market.
Comparison site Reallymoving.com recently carried out research into the amount of Stamp Duty paid by different homebuyer groups. By analysing data from 240,000 homebuyers since the beginning of 2017 and using HMRC data on Stamp Duty receipts they identified that downsizers are on average responsible for only 7% of Stamp Duty paid to the Treasury.
A downsizer is defined as someone buying a cheaper property than the one they are selling. Upsizers are the opposite, they are usually buying a bigger and more expensive property.
Boris Johnson stated last month that he is keen to shake up Stamp Duty with proposals being considered including a reduction in tax for all homes under £500,000 and slashing the current rate paid for homes worth over £1.5m from 12% to 7%.
There has since been speculation that he may go further and radically overhaul the tax by switching the responsibility from the buyer to the seller. This would reduce immediate upfront costs for all homebuyers except for downsizers and therefore, while it would encourage people to move, it would not help free up the family homes required at the top of the chain.
Government policy over the last few years has focused solely on helping first time buyers onto the ladder through Help to Buy and other schemes but nothing has been done to tackle the blockage at the other end, where an estimated 1.1 million homes with two or more spare bedrooms are lived in by a single person over 65, according to think tank Policy Exchange.
A tax break for downsizers would not only help this specific group but would also benefit the entire market, including first-time buyers, through greater fluidity and less competition for property, reducing pressure on prices.
If you are considering your property options, from downsizing to a fast cash sale contact the team at Wigwam today for a free valuation or advice on finding your dream home.