Call for Stamp Duty reform to free up homes for families

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Stamp duty should be scrapped for people downsizing their home to raise money for their retirement, according to an insurer.

LV= is calling for stamp duty to be waived or discounted for this type of house sale, to help free up more family homes.

More than a third (34%) of people approaching retirement are set to be "property pensioners" - relying on money tied up in their home to help give them a retirement income - the insurer found.

But it found that while downsizing into a smaller, cheaper property is a popular way to raise retirement cash, it can typically trigger a stamp duty bill of £4,600, based on average house prices.

Four in 10 (42%) of those nearing retirement said they would be more likely to downsize if a tax cut were introduced.

LV= said such a reform could also help younger home buyers find a suitable family home by allowing "empty nesters" to move and increasing the supply of larger homes.

John Perks, managing director of LV= Retirement Solutions, said: "More and more of us are relying on our home to help fund our retirement, yet retirees face significant costs if they choose to downsize.

"We're calling for Government to scrap the unfairly high stamp duty costs for downsizing pensioners and provide a much-needed injection of larger homes into the market for the millions of families struggling to move up the ladder.

"By increasing the number of property sales, this could also increase Government's stamp duty revenues in the long run, making it a win-win for everyone."

A three percentage point increase stamp duty land tax (SDLT) was imposed on April 1 for people buying second homes, such as buy-to-let investors in England, Wales and Northern Ireland.

In Scotland, stamp duty has been scrapped, but the land and buildings transaction tax that replaced it has also been hiked for buy-to-let investors, to prevent distortions happening to the housing market in Scotland from the stamp duty change in the rest of the UK.  

LV='s research is part of its annual state of retirement study, which will be released in full this summer.

Some 1,200 people aged over 50 years old who own their own home took part in the research.