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Cutting stamp duty for downsizers would boost second-steppers’ prospects – Phillips

by: John Phillips, operations director of Just Mortgages and Spicerhaart
  • 30/07/2018
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Cutting stamp duty for downsizers would boost second-steppers’ prospects – Phillips
There is always a lot in the press about the problems first-time buyers are facing when trying to climb the first rung of the housing ladder – but what about the rest of the chain?


More than a third of homeowners trying to move up the housing ladder can’t do so without financial help from friends and family, according to research from Lloyds Bank.

In fact it found that second-steppers are having to borrow an average of £24,450 (up £4,000 on 2017) to be able to take the next step on the housing ladder.

And half of these will have already received financial support when buying their first home.

For example, Lloyds Bank also found that former first-time buyers looking to make their next move live in a home worth £211,296 on average and want to move into a home worth £347,281.

That means factoring in £7,346 just for the stamp duty.


Size matters

And even for those where cost isn’t the problem – the next barrier is a lack of suitable properties.

Many have blamed the fact that many older people, who in the past would have downsized both for a more suitable home and to release cash, are no longer doing so, labelling them ‘selfish’ for ‘holding on’ to their family homes.

But in reality, many want to move but cannot afford to do so due to the costs involved – the main one being stamp duty.

When it costs someone looking to downsize thousands of pounds to move to a home worth either the same or less than the one they have, many are understandably choosing to stay put, with increasing numbers turning to equity release to supplement their pensions.

This of course means that those who are in their second home and looking to buy their third are struggling because the family homes they are looking for simply aren’t coming onto the market, and those properties that do are more expensive due to demand outstripping supply.


Struggling to move

This then means that former first-time buyers looking to make their next move cannot find any suitable homes because the third steppers are struggling to move on and this of course trickles down to first-time buyers, who then are finding their options limited because the rest of the chain is staying put.

Overall, the housing market is quite tough at the moment, and if the government wants to get things moving, it needs to seriously consider a shakeup of stamp duty.

This one tax is, in my opinion, the biggest barrier to a free-flowing housing market.

If stamp duty was cut altogether, or at least reduced and cut for downsizers, it would have a hugely positive impact, not just on the housing market, but the economy as a whole.



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