Older Homeowners Require Stamp Duty Relief

In their quest to stay in their much-loved homes, 80 per cent of over 55s chose an equity release mortgage.

According to new research from Standard Life and Age Partnership, this high percentage of over 55s opted for equity release so they did not have to downsize.

Another reason for not downsizing was the costs associated with moving house, including stamp duty – as 9 per cent cited this as the main motive for not selling up and moving to a smaller property.

Back in 2014 when the former Chancellor George Osborne made fundamental changes to stamp duty the average house price was £203,346.

Following Osborne’s reforms, stamp duty was paid on properties which exceeded £125,000 – this is approximately 61 per cent of the 2014 average house price.

Fast forward five years to 2019, NAEA Propertymark says the average house price stood at £244,729, which means that housebuyers are paying approximately 51 per cent of the price for stamp duty.

Now the Government are being pressured into reforming stamp duty back to 2014 levels by increasing the threshold to encourage more house moves.

A statement from NAEA Propertymark said:

“In order to maintain the 61 per cent ratio … NAEA Propertymark believe the value for property at which SDLT is paid should be raised to £150,000. By introducing a higher starting threshold this would provide a fairer system for those purchasing at the lower end of the housing market and ensure that SDLT keeps up with average property prices”

But NAEA believe that raising the threshold for properties costing over £150,000 would help all purchasers.

The Standard Life research also revealed that 4% of those polled chose equity release because they found it difficult to find a property in a particular location they wanted to move to.

Furthermore, 71 per cent of people stated that a ‘no negative equity guarantee’, meaning the owner of the property will never owe more than the property is worth when it is sold, swayed their decision to opt for an equity release product.

Laura Laidlaw, Head of Customer Communications at Standard Life, said:

“For an increasing number of people, property – often the home they live in – could be the answer to freeing up extra money. Either to supplement income in later life or to gift to loved ones.

“Our research would suggest that the emotional aspect of remaining in your home is what leads many to opt for equity release. A lack of supply, the pressure of moving and the costs of downsizing mean for many, it is not always a practical choice.

“While downsizing can work in both a practical and financial sense for some, the ‘no negative equity’ guarantee means remaining in your home is a viable choice for many looking to use the value of their property to support their lifestyle in later life. Having a good understanding of the wide range of available options will go a long way to helping those nearing or in retirement do what is right for them.”

Billy Burrows, a Director of The Retirement Academy talked to Money Marketing about equity release being utilised in retirement. He said:

“Most people don’t understand or engage with their pensions and investments but they take huge interest in their property, and the family home is often their largest financial asset.

“There are a number of ways that people can access the wealth in their property, including equity release, and the market for lifetime mortgages goes from strength to strength.

“I previously thought equity release should be treated like the Bank of England: as lender of last resort.

“I have now been convinced that, in the right circumstances, it can be used to achieve better outcomes for people in later retirement.”

Today's Conveyancer