Chancellor Jeremy Hunt is facing mounting pressure to make significant cuts to stamp duty in his upcoming autumn statement. The housing market in the UK has been stagnant, with house prices predicted to continue falling until 2025. Lenders are urging for a reduction in the tax paid when purchasing a property, particularly for older homeowners looking to downsize.
According to aides, any tax cuts made by the Chancellor must be affordable and not inflationary, as per the economic projections provided by the Office for Budget Responsibility. This means that income tax cuts are ruled out, but changes to stamp duty remain a possibility.
Stamp duty currently raises £14 billion for the Treasury each year, equivalent to two percent of its total tax take. The tax is charged at five percent for properties between £250,001 and £925,000, with an even higher rate of 12 percent for estates exceeding £1.5 million.
Advocates for stamp duty cuts argue that it would not only help stimulate the housing market but also address the issue of under-occupied homes. It is estimated that nine out of ten people aged over 65 live in homes that are larger than they need, accounting for a third of all properties.
One couple, Sara and Richard Brunning, who recently downsized due to health reasons, expressed frustration at having to pay stamp duty on their new property. They believe that stamp duty should be abolished for individuals in similar situations. They argue that the tax discourages older people from downsizing and hampers the housing market's overall efficiency.
In order to overcome possible objections and practical difficulties, suggestions have been put forward to limit the stamp duty cuts or exemptions to those who move into integrated retirement communities. These communities would offer self-contained accommodation, communal facilities, and various care and domestic services. Additionally, a minimum qualifying age could be implemented.
The demand for stamp duty cuts comes as housing policy becomes a focal point for next year's General Election. The Labour Party has vowed to build 1.5 million new homes within five years of taking power, while the Conservatives face pressure to address the challenges faced by both first-time buyers and older homeowners.