What if Stamp Duty was abolished?

I absolutely agree it should be per adult, as that links to earning capacity, but that was tried as the poll tax and there were so many protests it's was abolished.

No-one is saying that pensioner 'have' to downsize but currently if they want to, there is a disincentive to do so.

The point about increases in house prices - whilst it's true the the transaction values would be higher, your house is now worth more so it doesn't matter. Instead of losing money (to SDLT) you have converted your cash (assuming you are a cash buyer) into value in a property, so you have retained it. You equally retain it in all future transactions.

Well that's nonsense. There is no reason whatsoever why revenues couldn't be raised in other ways.

Council tax is already very high - we pay nearly 4k per year for a fairly standard 3 bed house.

I do agree with you though that stamp duty feels like a fairly unfair tax - buying a house is a stretch for many people as it is, and paying stamp duty on top of conveyancing fees, estate agent fees etc can make buying very difficult for many low to middle earners. A tax on profits made when selling (capital gains) is much more logical, as its a percentage of money earnt rather than trying to find extra.

Fair point. Anyone downsizing, then. It is just that older people tend to downsize. I am 61 and wouldn't consider it yet, and none of my friends would, but maybe in later years.

I live in a 4 bedroom 3 bathroom house (ok it’s a crap new build, but still). It’s worth about £525k. My mum lives a couple of miles away in a 2 bedroom bungalow (1 bathroom) with a smaller garden than me, worth about £525k.

It’s was a big factor in why my mum in her 80’s didn’t downsize
the reason for looking at downsizing was to go somewhere smaller with lower running cost
but it’s cheaper to stay where she is and spend the money it would cost to move with things like fees and stamp duty on running a house that’s way too big for her

I can see the issue. We want people to live in houses that suit their needs, so our housing stock is used to best effect, but the current tax regime does not encourage it.

When my dc leave home, I will be living in a 4 bed home on my own.

If I move it will cost me £20,000 in stamp duty, £10,000 in estate agency fees, £1,000 on a survey, maybe £2,000 in solicitors fees and searches, and maybe £3,000 in moving costs. That's assuming the first attempt at purchase goes through.

So realistically, £40,000 fees to move, plus the inevitable redecorating, and sorting the botch jobs and hidden issues in a different house & garden.

So it will cost me £60,000 to move, with a lot of stress and hassle, when I've spent 10 years renovating the house I already have.

I may wish to downsize and I certainly won't need a 4 bed house, but it's not enticing. I might as well stay where I am and just use fewer rooms.

Stamp duty is purely and simply a tax on moving house - which is a disincentive to everyone. It stops people moving for work; it means families are discouraged from moving to bigger houses and pensioners are discouraged from moving to smaller houses. As an older person, the reason I might move would be to downsize and release capital - but if a large chunk of that capital is eaten up in stamp duty and moving costs, why bother? If you want a mobile workforce and a housing market that works, then stamp duty should be notional rather than punitive.

I ought to downsize but the costs of moving means I will just be paying tax and other people for me to have a lesser asset. I wouldn’t actually free up much capital. I’d rather keep my big house in case I need the money for care home fees.

Why would you want incentivise over 65s from downsizing but not people younger?

I think Council Tax is the last tax that should be increased- it’s ridiculously high in many areas and is a very regressive tax, falling disproportionately on less wealthy people.

I agree, it's terrible in it's current format but it could be reformed to raise more revenue (by taxing valuable properties more) and be far more progressive.

tax is about the only thing regulating the housing market

How so?

It's not just on house sales. We ran a business from a rented shop unit in a high street shopping centre. When the lease ended, we renewed the lease. Being high street, the rent was around
£50k per year, and the new lease had higher rent than the old, so out outgoings were going to be much higher, and the landlord would be receiving higher rent on the new lease. The stamp duty was based on the new rent, and the length of the lease, and we had to pay it, not the landlord. It's bonkers.

Perhaps remove stamp duty if you’re downsizing.
That would have to be downsizing in terms of property size though, not price

Maybe there is an argument for having a lower rate of stamp duty for people over 65 who are downsizing.

How big are the houses all these downsizing pensioners are moving to that stamp duty eats up so much of their equity they won’t even contemplate it?
this actually shows that council tax is way out of step as well because it shouldn’t be cheaper in the long run to stay in a large 5 bed with all
the associated bills that moving to a 2bed flat or small bungalow.
This is just another thread demonstrating no one wants to pay tax.
Having been active in the housing market over the past couple of years the only thing that no stamp duty does is make houses more expensive as people are happy to pay ‘what they’ve saved’ over the asking price etc.
How is that a benefit? The housing market is a mess anyway.

I completely agree. I started a similar thread a while back. I need a bigger house for my family that's close enough to my elderly father to help with his care. In the area I would need, I'm looking at £50k in stamp duty.

I think Council Tax is the last tax that should be increased- it’s ridiculously high in many areas and is a very regressive tax, falling disproportionately on less wealthy people.

And the single person exemption should be made 50% as that’s a horrible extra burden on esp single parents but also all single people. Or it should just be made per adult rather than household and be done with it.

There might be something in what you say about stamp duty being economically damaging as things stand but I don’t think it should be abolished entirely - perhaps abolished or reduced for people’s first or only home, but definitely kept or even increased for additional properties.

Inheritance tax could do with going up imo, as could income tax on the most wealthy , and corporation tax.

why should pensioners have to downsize just because you don't' want to pay stamp duty though?

Stamp duty just needs rejigging.

If abolishing it would cause house prices to rise then surely that's an argument against abolishing it