The homeowner has to want to down-size themselves and no waiving of Stamp Duty will get them to want to do this if they don’t already believe its right for them
Bob Hunt is chief executive of Paradigm Mortgage Services
It was rather intriguing to hear the chief executive of L&G, Nigel Wilson, proposing a new brand of housing market intervention recently by suggesting that Stamp Duty Land Tax should be waived for those homeowners over a certain age. Wilson was arguing that such a move would encourage more older homeowners to ‘right size’ – that is move to properties which were right for them rather than hold onto properties which were too large and which had a large number of rooms that weren’t currently being utilised.
The suggestion is that this incentive would encourage people to put their homes on the market and would allow homeowners further down the chain – who perhaps had outgrown their home – to ‘purchase up’. It is an argument based on a presumption that many older homeowners want to move but are put off by the cost of moving and therefore decide to sit in their existing homes which are too big for their current needs.
While I can see some of the logic in this scenario, I fear it doesn’t quite get to grips with the psyche of individuals who have probably spent all their lives paying off a mortgage to live in their current home and, while family may have now flown the nest, still have a deep attachment to the family home and little motivation to move. Of course there are those older homeowners who acknowledge their current arrangements may not be perfect for them and look to downsize. I doubt very much however that any Stamp Duty payment is likely to be the reason why they would be put off making such a move.
There is also the very real concern, for people of a certain age, about leaving the house as an inheritance to their family and, quite frankly, not cashing in too early especially if house prices continue to rise. ‘Right sizing’ may well be right for society as a whole but it is individuals who have to make the decision and one wonders if most will be in the right, potentially altruistic mood, to take one for the team and free-up their house for the generation below.
Again, it’s my belief that the homeowner has to want to down-size themselves and no waiving of Stamp Duty will get them to want to do this if they don’t already believe its right for them. In the great scheme of things, the Stamp Duty payable is probably going to be a very small concern when looking at the overall decision.
There is also the issue of whether a taxpayer-funded incentive to older homeowners – who might well be viewed as having benefited greatly already from increases in house values over the past few decades – is unlikely to go down well with the wider electorate? Given what house prices have done, and the lack of housing supply, the government is preaching to the converted when it comes to helping potential first-time buyers through schemes such as Help to Buy, etc. However, looking at the ‘last move’ generation brings with it obvious opposition - I can see some of the headlines now along the lines of, ‘Haven’t the baby-boomers benefited enough?’ and therefore I think this is likely to be a non-starter.
In essence, as most housing market issues tend to, this comes back to getting more supply into the market, keeping up the supply of high LTV mortgages, and again ensuring we are doing all we can to help those who can afford it secure the finance and homes they need. If older homeowners want to stay in their properties, for whatever reason, then that is what they will do and a few thousand pound saved on moving isn’t going to facilitate the next generation getting on to, or moving up, the ladder. While this call for action might be laudable, greater incentives on the supply side would be at the top of my agenda, and should certainly be the priority for this government, and future ones to come.
