Stamp Duty: should it change to promote much more downsizing?

An interesting demand has been made of Chancellor Rishi Sunak - to consider reforming stamp duty with thresholds revised to reflect local markets.

The call has come from estate agents’ trade body Propertymark which has lobbied Sunak ahead of the Budget and spending review scheduled for later this month.

Propertymark says the current system has been in place since 2014 and is ripe for change.

The organisation tells Sunak: “A range of opportunities for innovation could be explored, such as how the tax could be levied to minimise the restriction of transactions and facilitate more dynamic movement in and across the market, incentivising downsizers (perhaps via a ‘last-time’ buyer’s relief), helping more people realise their aspirations of owning their own home, maximising use of existing housing supply, and contributing to Levelling Up and Net Zero agendas by bringing more empty homes back into use and supporting energy efficiency improvements.”

The submission by Propertymark dwells for some time on downsizing. “Present inefficiencies that create a barrier to downsizing reduce demand for housing that has been specifically designed for older people. In the UK, just two per cent of the country’s housing stock has been designed with pensioners in mind, further perpetuating the lack of movement and elevating prices due to a lack of options for those that would otherwise be inclined to move."

It tells the Chancellor that initiating a review could promote movement in and across the housing market, helping to free up homes for first-time buyers, second steppers and those looking to right-size (up or down).

Propertymark says stamp duty - more precisely, a reduction or radical change in it - can play a vital part in the wider economy.

“It should be noted that even a one per cent reduction in SDLT has been shown to increase housing market activity by 20 per cent and the implications of this - particularly in attempts to correct market inefficiencies, support home ownership, and encourage investment in the private rented sector - should be explored as a priority” says the submission.

Much of the rest of the document sent by Propertymark to the Treasury concentrates on reforms to assist landlords, avoiding a further exodus from the lettings market.

Specifically these suggestions are:

- to develop a private renting sustainment and support programme to help prevent further debt, poverty and homelessness, and to help enhance access to affordable housing for households displaced as a result of Covid-19;

- to adequately resource and reform the existing courts' system to deal with the volume of possession hearings following the stay on evictions and extension to notice periods through the course of the pandemic;

- and to invest in supporting landlords to make energy efficiency improvements by reintroducing an improved and enhanced Green Homes Grant Voucher Scheme and ensuring that policies extend beyond a one-size-fits-all approach.