CashNews.co
With Brits bracing themselves for the harsh economic measures anticipated in the autumn statement – measures which Prime Minister Sir Keir Starmer has already hinted will be “painful”—Barclays is pushing for targeted relief to support future generations.
The bank has appealed to Chancellor of the Exchequer, Rachel Reeves, to consider reducing the stamp duty for older Britons aiming to move to smaller residences.
Stamp duty currently applies to properties over £250,000, or £425,000 for first-time buyers, with rates ranging from 5% to 12% depending on the property’s value.
For instance, a £1million property could incur an eye-watering £41,250 tax bill, while the average charge hovers around a hefty £9,000.
People heading into their older years often think about downsizing when home maintenance becomes burdensome or when their living space exceeds their needs as children fly the nest.
However, Barclays’ research suggests that the existing fiscal barriers are prompting over a million UK residents to postpone such moves.
A ripple effect is being felt as first-time buyers, crucial to the property market’s health, are finding it increasingly more difficult to get on the property ladder. Research by Barclays shows that around 85% of UK homes have at least one spare bedroom, classed as “under-occupied”.
It also found that 1.7 million of these households are open to moving in the next two years, but many are put off by moving costs and stamp duty. UK Finance says this tax is a major barrier for older homeowners, or “last-time buyers”, who want to downsize.
Economists are urging the chancellor to exempt this group from stamp duty. Barclays believes that with the right incentives, 3.8 million households could downsize, freeing up homes and reducing bills during the cost of living crisis.
Stamp duty revenue is already falling as property transactions slow, from £11.7 billion last year to an expected £8.6 billion this year.
Mark Arnold, Barclays’ head of mortgages, told The Telegraph: “A stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market, including the challenges faced in the demand side.”