Removing stamp duty for older homeowners and people moving to smaller properties could help release housing stock and stimulate transactions, according to economist Darren Winder.

Winder, head of Lazarus Economics and Strategy, argued that the cost of moving home had become a more significant obstacle to housing market activity than mortgage affordability.

Speaking at the Brightstar Specialist Lending Expo at the London Stadium on 7 October, he drew a distinction between relatively resilient first-time buyer activity and the weaker market for existing homeowners looking to move.

He suggested that stamp duty, legal expenses and removal costs were discouraging households from moving, even where they might otherwise want to change properties.

Winder said: “The first-time buyer market looks all right. So why aren’t people moving house? They’re not moving houses.”

He identified older owner-occupiers as a group that could respond particularly strongly to changes in property taxation.

Winder said: “For me, the thing to do would be, at the very least, just get rid of stamp duty for anyone who’s downsizing, get rid of stamp duty for anyone who’s, say, over 60.”

He claimed that approximately 80% of people aged over 60 owned their homes, while fewer than 2% were moving. Reducing the financial penalty associated with moving could, he argued, encourage some of these households to leave larger properties.

Asked how quickly a reduction in stamp duty could affect transaction volumes, Winder replied: “Instant.”

He added: “It’s effectively a tax, and it reduces the volume. So remove the tax, you’ll increase the volume. I think in a very material way.”

Winder argued that substantial demand for housing transactions was already present but was being suppressed by the associated costs.

AFFORDABILITY AND MARKET ACTIVITY

Winder also challenged the view that deteriorating affordability was the principal reason for subdued housing market turnover.

He said average earnings had increased by approximately 40% since the pandemic, against house price growth of around 30% over the same period.

On his figures, the typical house price-to-earnings ratio for first-time buyers was approximately 4.5 times, below its pre-pandemic level.

Nevertheless, he observed that housing transaction volumes remained substantially below those recorded before the financial crisis.

Winder argued that reducing transaction taxes and making regulatory changes could encourage greater turnover, with wider economic benefits as households spend money on goods and services associated with moving home.

His remarks suggest that measures aimed at existing homeowners, rather than solely at first-time buyers, could play an important role in increasing housing market activity.

Yoast SEO Focus Keyphrase:

Meta Description: