Barclays urges the UK government to offer tax incentives for homeowners looking to downsize, aiming to address the housing crisis by freeing up 3.8 million homes.
- The bank recommends that downsizers be allowed to offset moving costs against their stamp duty bill to encourage relocation.
- Barclays stresses the need for a comprehensive strategy to tackle housing market challenges, including simplifying the moving process and increasing retirement housing construction.
- Critics argue that such tax breaks may disproportionately benefit wealthier homeowners rather than first-time buyers or families in need.
- Despite the potential benefits, there is concern about the fairness of incentivising a generation that has gained from house price inflation.
Barclays has proposed a scheme in which homeowners looking to downsize could offset their moving costs against their stamp duty bill, aiming to incentivise relocation and thus alleviate the housing crisis by potentially freeing up approximately 3.8 million homes. The bank highlights the importance of reducing financial burdens associated with relocating for those who are ‘under-occupying’ properties.
The report suggests that alongside financial incentives, there should be measures to simplify the moving process and boost the construction of retirement housing, which would in turn enhance liquidity in the housing market and assist families seeking larger homes. Barclays underscores the requirement for a ‘stronger, more holistic strategy’ for tackling the significant challenges faced by the housing market.
Mark Arnold, head of mortgages and savings at Barclays, supports the initiative by pointing out its potential to improve the overall fluidity of the housing market. The call is also backed by a Savills report indicating that more than 44% of homeowners are over 60, yet they make up less than 10% of market activity. Lucian Cook, director of residential research at Savills, suggests that diminishing the stamp duty burden could motivate downsizers to move, thus optimising the use of current housing stock.
However, there is significant opposition to the proposal. Critics express concerns that the proposed tax breaks might favour wealthier homeowners who have benefitted from significant house price inflation, overlooking the needs of first-time buyers and financially strained families. Martin Stewart, a mortgage broker, questions the fairness of incentivising the generation that has most benefitted economically over several decades.
Aneisha Beveridge, head of research at Hamptons, echoes these criticisms, asserting that the subsidies should possibly be redirected to other areas, as downsizers are often mortgage-free and have significantly benefited from price growth over the past years.
While Barclays’ proposal offers a potential solution to the housing crisis, its implementation must carefully consider fairness and widespread benefit.
