Currently, properties that are brought by the provider as part of an equity release scheme come under the same terms as a normal purchase when it comes to Stamp Duty.
This means the client loses out on their cash return as the cost of Stamp Duty is added onto the deal.
Mark Neal, managing director of Economic Lifestyle, said: “We would like to see the scrapping of stamp duty in the equity release market as it lessens the proposition to the customer by having to pay it. When you are dealing with people releasing capital for their retirement, a lawyer can independently confirm this is what is happening so why should they be forced to pay stamp duty on this capital?”
Currently, if an equity release client wants to release £100,000 of capital from their £200,000 home, they are forced to pay Stamp Duty at 1 per cent, meaning there are an additional £2,000 costs involved in the transaction.
Also, if the sum of money is higher, for example, releasing £120,000 on a £250,000 house, the deal is hit by stamp duty of 3 per cent then another 1 per cent on the buy-back.
Dean Mirfin, business development manager at Key Retirement Solutions, said: “It’s another tax on the consumer. People are trying to sort out their retirement and we do not want to burden them with another expense. It would be a simple move to take it out of the capture of Stamp Duty and it needs addressing by the government as soon as possible.”
Jon King, chairman of Safe Home Income Plans (SHIP), commented: “Anything that saves on tax will help as these savings will work their way back to the equity release client. Therefore any reduction in Stamp Duty would be welcomed, but I think this is highly unlikely to happen.”
