Scrap stamp duty for over-75s to solve housing and care crisis, says care home boss

Stamp duty should be abolished for over-75s to encourage downsizing and free up family homes for younger buyers, said Will Bax, chief executive of Retirement Villages Group.

England’s property transaction tax is a “handbrake” that prevents older people from moving when they need money for their care needs, says Bax.

“We have to make it easier for people to cut back,” says Bax. “The issue that always comes up is stamp duty as a handbrake on that decision. My personal view is that stamp duty should be abolished for everyone aged 75 and over, especially if they are moving into a supported environment. If we can move a significant number of older people into these types of settings, we will begin to solve the housing crisis and the social care crisis. And I can’t think of two more important issues that need to be resolved in Britain today.”

Underemployment has increased dramatically in recent decades, largely because people have continued to live in family homes long after their children have left home. According to the English Housing Survey, the number of homeowners with at least two spare bedrooms increased by 950,000 to 8.25 million between 2017 and 2022. This translates to over 16.5 million unused bedrooms in owner-occupied homes across England.

Purchasing property in England and Northern Ireland is subject to stamp duty, which is levied in bands, starting at 5% for property values ​​between £250,000 and £925,000, and rising to 12% for values ​​above £1.5 million. Bax stressed that stamp duty is a significant deterrent for the elderly, as their changing needs mean they may not be able to live in a new home for long and they need to save money for future care.

“The psychology of the older person needs to be understood in that equation,” Bax explained. “They are giving away money that they could use to fund their health care needs in the future, or pass on as a legacy to the next generation.”

Due to its banded structure, house price increases have led to disproportionate increases in stamp duty, making the tax an increasing barrier to relocation. In September 2022, then Chancellor Kwasi Kwarteng increased the zero rate of stamp duty from £125,000 to £250,000 in England and Northern Ireland. This measure adjusted the threshold to be in line with house price growth since 2006 and remained one of the few policies not reversed when Jeremy Hunt became Chancellor weeks later. However, no adjustments have been made to the higher tariff margins, which remain stricter.

For example, a buyer who bought an average home in London in March this year would have had to pay £12,500 in stamp duty, while purchasing a £1 million home would result in a £41,250 stamp duty bill.

So abolishing stamp duty for the over-75s could ease the financial pressure on older homeowners, allowing them to move more freely and meet their healthcare needs, ultimately benefiting the wider housing market and social care system.