Around 31% of brokers said that stamp duty reform is most needed for downsizers and buy-to-let (BTL) landlords respectively, a Mortgage Solutions poll has found.
According to the poll, this was followed by stamp duty reform for first-time buyers at around 21% and then second steppers at 17%.
Stamp duty reform is not a new topic for the mortgage industry, with the latest Budget including scrapping multiple dwellings stamp duty relief and stamp duty for nominee purchases.
However, many industry figures believe that the measures did not go far enough, with some calling for downsizer stamp duty to be abolished, improved regional variation and BTL stamp duty to be examined.
Richard Merrett, managing director of Alexander Hall, said that he was not surprised by the results, especially around BTL.
“The buy-to-let market has been stifled for some time, not purely due to the additional stamp duty levy, but anything that can help this area would be welcomed by brokers, businesses and landlords.
“The private rented sector is crucial to our market, so its long-term health is beneficial for all in our industry. Alongside changes to stamp duty, I’d like to see changes to capital gains tax to enable landlords who are considering exiting the market to do so without punitive costs; this could make more stock available,” he added.
Merrett continued on to say that the highlighting of downsizing was “consistent with the regular views we hear”.
He explained: “In this country, there are an estimated nine million bedrooms that lie unused in properties owned by over-65s. Encouraging downsizing via stamp duty incentives would potentially free up valuable stock and could go some way to addressing the supply issues our market is challenged by.”
Anthony Rose, CEO of Ldnfinance, agreed that it was not surprising to see stamp duty reform for landlords and downsizers coming at the top of the list.
“The current stamp duty position on both is causing structural issues in the housing market. There are currently millions of underused bedrooms in the UK, because when older homeowners do their sums, downsizing doesn’t look very financially attractive and the cost of stamp duty is often the single biggest driver of this, especially in higher-value areas like London and the South East,” he noted.
Rose said that there had been a surge in rental prices in the last two years, and a “large part of this is due to a lack of new landlords into the market and, along with the issues around offsetting mortgage costs for income tax, the big barrier to entry is the cost of stamp duty, including the 3% surcharge”.
“The government would be able to go some way to alleviate these problems by reforming the stamp duty for both downsizers and landlords,” he said.
Stamp duty a ‘bleak barrier’ for second steppers and downsizers
Leon Diamond, CEO of Livemore, said that “older generations of second steppers and downsizers are finding the high cost of stamp duty a bleak barrier to moving house”.
“While on the mend, inflation is still high and the economy uncertain, so taking the leap to move house is too big a risk for many people. This is often exacerbated for borrowers in their mid-to-later years of life, many of whom are either retired or thinking about retiring. Why move now when they can wait for stamp duty cuts, which seem inevitable as a pre-election play come autumn?” he noted
Diamond continued that the downsizers’ vote of 31% is “no surprise” and shows that “supporting this group has wide appeal, not least because a boost to the downsizing tranche of borrowers will generate a shared benefit across the housing sector”.
“The move of downsizers into their desired homes for their futures will free up larger housing stock for people who have been holding off on second stepping for some time. Stamp duty relief could be the great catalyst for this to happen,” he said.
‘We’d like to see the rule book being ripped up’
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said that “for better or for worse, stamp duty has an impact on the market”.
“The way it’s applied can either be a stimulant or a sedative, which is why government should keep it up to date with the challenges homebuyers are facing. There hasn’t been any innovation in the tax structure for years, with temporary cuts and holidays being preferred to well-thought-out, creative solutions,” he added.
He continued on to say that there was “no shortage of things that could be done to both oil the wheels of the market and bring greater, lasting benefit to homebuyers”.
One such example was allowing one-off waivers for downsizers, which could help people “rightsize” and “free up larger homes at the top of the ladder”.
Stinton noted that the 3% surcharge on additional properties that had been intended to give first-time buyers an advantage over landlords hadn’t worked in its intended way.
“Supply of new homes is chronically too low, and the rising cost of renting for the next generation of buyers has not been eased by adding a significant extra upfront cost to those investing in rental properties.
“Landlords could better spend the 3% surcharge on making energy-efficient improvements to better the living conditions for their tenants, as well as turning the dial on the government’s net-zero target in 2050,” he added.
Stinton continued: “Everyone seems to be in agreement: stamp duty needs to be changed. The question isn’t whether there should be reform, it’s how it can change for the better. We’d like to see the rule book being ripped up, and an ambitious and creative alternative would be far better than resorting to just tinkering around the edges or, worse yet, doing nothing at all.”
Jason Berry, group sales director for Crystal Specialist Finance, said that a progressive stamp duty system where the rate increases gradually based on the property value “will make it fairer for lower-income individuals while ensuring higher-end property transactions contribute proportionately more”.
First-time buyer exemptions would lower the burden for those getting on the ladder, and regional variation would offer relief to buyers in less-affluent regions.
A temporary stamp duty holiday for sustainable properties or reduced rates for properties meeting certain sustainability criteria would incentivise “environmentally friendly housing choices while supporting the government’s climate change objectives”, Berry added.
Merrett added that he would also like to see reform that linked purchasers making energy-efficiency improvements to older homes with some kind of rebate post-improvement.
“Most people buying an older home are going to do some sort of work, so this change would further encourage the modernisation of properties in the right way for our environment and futures, and put money back into the economy in a number of different areas,” he noted.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
