Stamp duty holiday for first time buyers welcome but could exacerbate issues around supply and demand in housing - Saga
Saga's executive director has commented on the Chancellors announcement of a 'Stamp Duty Holiday' for first time buyers.
The stamp duty holiday for first time buyers will be welcomed by Saga members who had called for this prior to the 2017 budget, however without creating liquidity in the market this will simply exacerbate the already serious issues around supply and demand for first time or starter homes. Saga members had called for further measures to incentivise downsizing from family homes in order to help create this housing flow.
If the Prime Minister can bring in measures to enable people to 'rightsize' in retirement this would be a true inter-generational solution to the housing crisis and would deliver on Mrs May's promise of helping young and old alike.
People should be free to choose how and where they live. However, there are many people who cannot get onto the housing ladder or want to downsize but are put off because of the cost or availability of appropriate housing. Saga has been lobbying successive Governments for a Stamp Duty exemption for both first-time buyers and those downsizing and buying age-appropriate homes.
It is great news that the chancellor has recognised this, at least in part, and given first time buyers a reprieve from the crippling costs of stamp duty, however this is only one very small piece of the jigsaw. Without helping those who are prevented from downsizing due to these same costs, this move will simply mean more people will be unable to get on the ladder, and those houses that do become available will command a higher price, potentially outweighing any stamp duty savings made.
By pairing this with helping those who want to downsize it would be a triple win for Britain and for inter-generational fairness. Independent economists estimated that it would prompt an extra 111,000 family homes would come onto the market; boost the building of homes suited to older generations; and, it could also boost the Government coffers due to an estimated £500 million in Stamp Duty from consequential house moves.
There are some 3.4 million households aged over 65 who are potential rightsizers: 1.1 million have one spare bedroom and 2.3 million have two or more spare bedrooms. Saga research shows that seven in ten over 50s would like to 'right size' in retirement to smaller homes or age-related developments. Britain needs homes to be adapted or built to help older people live well in later life. Only 1% of Briton live in retirement developments, compared with 17% in the US and 13% in Australia.