New stamp duty reforms are helping to boost the finances of Britain’s elderly, according to figures from retirement house builder Churchill. The reforms are also encouraging many to downsize and buy property in a retirement community.
The new structure stamp duty announced in the Autumn Statement in 2014 reduced the stamp duty for 98% of Britain’s buyers and changed the system to incremental stamp duty rises.
Under the new rules people won’t pay any stamp duty on houses valued up to £125K. The tax is then applied at 2% on the portion up to £250K, 5% up to £925K, 10% up to £1.5 million and 12% on everything over that. These changes mean that people who want to buy an averagely priced home of £275K, will pay £4,500 less tax than under the old system.
The reforms will stimulate market movement and older people looking to downsize are amongst those that will benefit most. Those selling at around the £250,000 mark, will no longer have to drop their price under £250,000, the former stamp duty threshold and may be financially better off. Potentially, this windfall capital can be used to help fund their retirement needs.
Not everyone wants to buy a retirement home and every year we are seeing a rise in the number of people choosing to rent on Assured Tenancies in later life. For older people taking on another property in their 70s and 80s doesn’t make financial sense. Renting also takes away the headaches and costs of property maintenance too and solves inheritance tax issues associated with property ownership.
For people who rent in retirement, this additional windfall capital is a real bonus; it can be invested for the future, gifted to children or ultimately the money can spent enjoying retirement.