NAPB backs pensioner stamp duty cut as alternative to 'costly' equity release

New calls have emerged to give pensioners stamp duty tax breaks to downsize their homes.

The National Association of Property Buyers (NAPB) suggests the move would boost housing stock for sale and help reduce the rising numbers of people tempted to utilise often-expensive equity release products.

It comes as new research revealed how the number of homeowners releasing equity from their property between January and March rose by more than 20% to a new quarterly high of 23,395. 

The Equity Release Council says although the number of those using equity release products had not reached the same level as before the pandemic, the average loan size grew 6% per cent in the 12 months ending March 2022.

Rolande said: “Equity release can be expensive and can be significantly more expensive than mortgages. The average interest rates on lifetime mortgages are approximately 4%, with the lowest rates nearer to 3%. 

“Interest is also due on the debt and by opting not to make voluntary payments to reduce the debt, the interest compounds.  Several fees will also be payable in addition to the interest.

“Equity release should always be a last resort move. It is a useful and valuable product to many, allowing the chance to live a better life or fund a property, business or dream holiday. But once it’s gone, it’s gone and further borrowing will erode future gifts or inheritance.”

Instead, Rolande suggests a stamp duty cut could help pensioners.

He added: “It would allow them to move without the penalty of high stamp duty and would certainly encourage more to do so.

“Currently a pensioner selling a family home at £700,000 to buy at £500,000 would face a £15,000 stamp duty bill and with other costs such as estate agent and solicitors a move downward is going to cost them nearly £30,000.

“This is a figure many simply cannot bring themselves to pay when leaving a much loved family home. Government receipts from stamp duty have more than doubled in the last ten years so there is certainly capacity to offer targeted reductions to help free up stock.”

The NAPB is also calling on Conservative Party leadership contenders Rishi Sunak and Liz Truss to put tackling the housing crisis at “the top of their list” if they become Prime Minister.