Paul Smith, chief executive, Haart
Downsizers have been left behind when it comes to policy to help address the state of the UK housing crisis.
We all know that over-55s are much more likely to want to move than young people, but stamp duty is a massive deterrent and the cost and hassle is putting them off moving to a home that better meets their needs.
At the same time, demand for family homes far exceeds supply, pushing up the price of family-sized detached and semi-detached properties by 5.3 per cent and 4.6 per cent on the year respectively, far faster than the national average.
As a result, families are being priced out. In the long term, the government must respond to the plight of the second-stepper and ensure it is building enough family sized-homes, and not just flats, to give families room to grow.
However, building enough suitable homes remains a strenuous and long-term battle, and we are also in need of a serious strategy to help present downsizing as an
attractive proposition and a genuine alternative to staying put.
Families are being priced out
By doing so, downsizers will be encouraged to move to smaller, more suitable homes, in turn freeing up properties for growing families.
This move would make leaps in increasing fluidity within the UK housing market and would give more people the opportunity to climb on and up the housing ladder.
If the government was better at listening to the industry, they would realise the effect more stamp duty changes would have on the ground. The first-time buyer stamp duty cut has already had a big impact on the market, and I believe we could see the same if the government offers downsizers the same deal.
Many of those at the top of the housing tree would like to find a way out of their high-maintenance family home, and this quick fix could have a significant impact on the ground.
Sebastian Riemann, consultant, Libra Financial Planning
A stamp duty exemption for those downsizing is unlikely to offer a magic pill that would encourage more people to sell and get the housing market moving again.
By and large, tax cuts can manipulate the markets and redistribute wealth to those areas that need it. This is the theory anyway. But when it comes to the housing market this cause and effect is never as simple as that. Take the recent abolition of stamp duty for first-time buyers, introduced in the November 2017 budget. This effectively removes stamp duty for all FTBs purchasing a property of up to £300,000 (and offers substantial reductions if the property is priced at less than £500,000).
This offers tangible savings to many FTBs and has helped with the initial costs of purchasing a property. But the reality is that it hasn’t brought an abundance of would-be homeowners back to the market. It certainly hasn’t solved affordability problems for first-time buyers. If anything, it has kept prices of FTB properties artificially higher than they would otherwise have been in my opinion.
There is an inherent shortage of retirement homes
The same is true at the other end of the housing market. Removing stamp duty for those downsizing is, in itself, unlikely to cause them to dispose of an appreciating asset. As long as the perception is that prices will go up in the medium to long term, the problems will persist.
The under-occupancy of family homes is certainly one of the main roots of the problem in the housing market. But as developers are focusing on building flats and large homes to maximise profits, there is an inherent shortage of retirement homes. Properties with covenants restricting owners to be of a minimum age are not the solution either, as these are inherently difficult to sell at a later stage.
It may be that an increase of taxes on empty or under-occupied homes will make more of a difference. The recent clampdown on overseas property owners and money laundering has paved the way for a shift in this area; the next step should be to limit the types of property that non-UK residents or citizens can own. This type of solution
would certainly free up much-needed property. The empty bedroom tax could further assist, particularly if this is coupled with some stamp duty reductions as an incentive.