Incentivise downsizing to rebalance housing market: RICS

Changes to housing tax that incentivised downsizing would help rebalance the UK housing market, according to RICS.

The organisation also says changes to council tax and stamp duty would help young people become homeowners.

Over 20 per cent of respondents to the RICS Residential Market Survey believe tax incentives to encourage downsizing would increase efficiency in the UK housing stock distribution, matching properties better to housing needs.

The government has not acted on RICS’ previous calls to incentivise downsizing.

One method RICS has previously suggested is to incentivise owners of larger propertied to move to smaller one was to make them exempt from stamp duty. The professional body argues this would bring more second-hand properties to market, which would benefit the entire housing chain address the UK’s wider housing shortage.

Another proposal from RICS is to scrap stamp duty and adjust council tax to make up lost revenue. This was seen as a viable option by just under 20 per cent of respondents.

RICS policy manager, Abdul Choudhury, said changes should be considered carefully comments: “Providing an SDLT exemption for downsizers could free up larger, underused properties; but will likely provide them with a market advantage over other participants.

“Similarly, replacing SDLT with council could increase house buying and selling activity; but increase day-to-day living costs at a time when occupiers are already facing higher bills.

“However, given the state of the housing market, it would be prudent for the government to consider the cumulative impact current taxes are having on behaviour and determine what changes can create a more sustainable and vibrant property sector,” he says.

Choudhury says the government should undertake a full review of the SDLT system: “We would therefore urge the government to undertake a full-scale review of the SDLT system – starting with what it hopes to achieve from this tax in terms of revenue generation, market fluidity or another objective.”

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