Stamp duty should be abolished for over-75s to encourage downsizing and free up family homes for younger buyers, according to Will Bax, CEO of Retirement Villages Group.
England’s property transaction tax is a “handbrake” preventing older people from moving when they need funds for their care needs, Bax asserts.
“We need to make it easier for people to downsize,” Bax said. “The issue that always comes up is stamp duty as a handbrake to that decision. My personal view is stamp duty should be eradicated for anyone aged 75-plus, particularly if they move into a supported setting. If we can move a material number of older people into those kinds of settings, we start to solve the housing crisis and the social care crisis. And I can’t think of two more important issues to solve in Britain today.”
Over the past few decades, under-occupation has surged, largely due to people remaining in family homes long after their children have moved out. Between 2017 and 2022, the number of homeowners with at least two spare bedrooms rose by 950,000 to 8.25 million, according to the English Housing Survey. This translates to over 16.5 million unused bedrooms in owner-occupied homes across England.
Stamp duty is paid on property purchases in England and Northern Ireland, charged in bands starting at 5% for property values between £250,000 and £925,000, and rising to 12% for values above £1.5 million. Bax highlighted that stamp duty is a significant deterrent for older people because their changing needs mean they might not be able to live in a new home for long and they need to save money for future care.
“The psychology of the older person needs to be understood in that equation,” Bax explained. “They are giving money away that they could be using either to fund their health needs in the future, or passing on as a legacy to the next generation.”
Due to its banded structure, house price rises have led to disproportionate increases in stamp duty bills, making the tax an increasing barrier to moving house. In September 2022, then-Chancellor Kwasi Kwarteng raised the nil-rate stamp duty band from £125,000 to £250,000 in England and Northern Ireland. This move adjusted the threshold to align with house price growth since 2006 and remained one of the few policies not reversed when Jeremy Hunt became Chancellor weeks later. However, no adjustments were made to the higher rate bands, which remain more punitive.
For instance, a buyer purchasing an average London home in March this year would have had to pay £12,500 in stamp duty, while purchasing a £1 million home would incur a £41,250 stamp duty bill.
Abolishing stamp duty for over-75s could thus relieve financial pressure on older homeowners, allowing them to move more freely and support their care needs, ultimately benefiting the broader housing market and social care system.
