An ever increasing number of pensioners are relying on the equity in their home to help meet the cost of retirement, leading to calls for Stamp Duty to be scrapped for pensioners.
Research from LV= has shown that:
- 34% of people approaching retirement will use the money tied up in their property to help pay for their retirement
- The number of people planning to use the equity in their home for this purpose has increased by 50%
- Downsizing, which involves selling a more expensive property, to buy a cheaper home, is the most popular way of releasing equity
However, downsizing can be expensive.
Not only will pensioners be faced with the usual costs of buying and selling; estate agents, legal fees, removals costs, but they may also have to pay Stamp Duty.
Stamp Duty costs
Stamp Duty is paid when a residential property is bought for more than £125,000.
The exact amount payable is calculated on a tranche based system. Nothing is paid on the first £125,000 of the purchase price, 2% on the amount between £125,000 and £250,000 and 5% on the excess.
The research shows that 42% of people approaching retirement would be more likely to consider downsizing if Stamp Duty were abolished.
Commenting on the problem, and calling for Stamp Duty to be abolished for pensioners, John Perks, Managing Director of LV= Retirement Solutions, said: “More and more of us are relying on our home to help fund our retirement, yet retirees face significant costs if they choose to downsize.”
“We’re calling for Government to scrap the unfairly high Stamp Duty costs for downsizing pensioners and provide a much-needed injection of larger homes into the market for the millions of families struggling to move up the ladder. By increasing the number of property sales, this could also increase Government’s stamp duty revenues in the long run, making it a win-win for everyone.”