Barclays has proposed a tax incentive for homeowners considering downsizing, aimed at freeing up millions of homes for larger families and tackling the UK housing crisis.
- The bank suggests offsetting moving costs against stamp duty to encourage ‘under-occupiers’ to relocate, enhancing market liquidity.
- Additional measures include simplifying moving processes and increasing retirement housing to further stimulate market activity.
- Savills report highlights that over-60s own a large share of homes, yet are underrepresented in market transactions, supporting Barclays’ initiative.
- Critics question the fairness, arguing that benefits might skew towards wealthier, older homeowners, potentially neglecting first-time buyers.
Barclays has put forward a proposal urging the UK government to implement tax breaks for homeowners who choose to downsize. This move is designed to ease the UK’s housing crisis by unlocking approximately 3.8 million homes, thus aiding larger families in need of more space. By allowing downsizers to offset moving costs against their stamp duty bills, Barclays believes that the financial burden of moving can be alleviated. This financial incentive is expected to encourage ‘under-occupiers’ to move, thereby increasing the availability of homes for growing families.
In its report, Barclays emphasised the importance of a comprehensive strategy to tackle the housing market’s significant challenges. Besides financial incentives, the bank also calls for efforts to simplify the moving process and to enhance the development of retirement housing. According to Barclays, such measures could significantly boost market liquidity. Mark Arnold, head of mortgages and savings at Barclays, asserted the need for a holistic approach, stating, “A stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market.”
Supporting Barclays’ proposal, a report from Savills reveals that over 60s comprise 44% of homeowners but make up less than 10% of the buying and selling activity. Lucian Cook, director of residential research at Savills, noted that reducing the stamp duty burden could incentivise more senior homeowners to consider downsizing, thus optimising the use of existing housing stock.
Despite the potential benefits outlined, critics have expressed concerns regarding the equity of such tax breaks. Mortgage broker Martin Stewart questioned the merit of incentivising downsizers, highlighting that this demographic has traditionally benefited most from house price inflation. “Why incentivise the generation that have been the biggest beneficiaries of house price inflation over the past few generations?” he asked. Similarly, Aneisha Beveridge, head of research at Hamptons, argued that subsidies might be more appropriately directed towards first-time buyers or families under financial pressure, as downsizers often enjoy greater financial stability and have accrued significant property value. These concerns suggest that the proposed measures might not address the needs of the broader population.
The call for downsizing incentives brings to light divergent views on resolving housing market inefficiencies, reflecting broader debates on equitable economic policies.
