A change in the way people own property?

economic

Part of the problem is stamp duty. If there was no stamp duty I imagine many would downsize.

ukcarper

economic wrote: »

Part of the problem is stamp duty. If there was no stamp duty I imagine many would downsize.

Stamp duty is not that much of a problem, the problem is a lack of suitable property.

economic

ukcarper wrote: »

Stamp duty is not that much of a problem, the problem is a lack of suitable property.

If stamp duty were to be scrapped, the older generation with large houses would find it a lot more attractive to downsize. It would be cheaper. The other problem is that the smaller home/flats have gone up a lot more in price then the larger homes on a % basis so there is not much equity to be released by downsizing. The stamp duty makes things worse.

westernpromise

ukcarper wrote: »

Stamp duty is not that much of a problem, the problem is a lack of suitable property.

No, it's the stamp duty that's the problem.

Older folks who've been in their house for 30 years realise, in my experience, that by the time they sold up, paid the agent, paid the lawyer, paid the surveyor, paid to refit the new small house, paid to live elsewhere while it's being done up and paid the stamp duty, there'll be so little left of the money that they're not being adequately compensated for moving to a smaller house.

If I put an extension on my house, every £ I spend goes to improve the house. If I move sideways to a bigger house in a cheaper area at the same price, I'm taxed more heavily for doing so than for smoking, and every £ of that tax is utterly wasted. Not a penny of it goes to improve the house.

Herzlos

Most of the expense still applies without stamp duty though.

Since smaller properties seem to have gone up in value more proportionally, there's not as much of a saving to downgrade, especially if you need to do any internal work beyond basic decorating. There's probably some saving but is it enough to overcome ~30 years of familiarity and getting comfortable? Worth having to pack everything up to move? Remember a new address, update all your utilities and accounts and so on? Worth doing the old house up to sell first, too?

It might make sense if you're going from a 3/4 bed detached to a 1 bed flat/semi, but there's no real sense if you're only going down a little bit.

ukcarper

westernpromise wrote: »

No, it's the stamp duty that's the problem.

Older folks who've been in their house for 30 years realise, in my experience, that by the time they sold up, paid the agent, paid the lawyer, paid the surveyor, paid to refit the new small house, paid to live elsewhere while it's being done up and paid the stamp duty, there'll be so little left of the money that they're not being adequately compensated for moving to a smaller house.

If I put an extension on my house, every £ I spend goes to improve the house. If I move sideways to a bigger house in a cheaper area at the same price, I'm taxed more heavily for doing so than for smoking, and every £ of that tax is utterly wasted. Not a penny of it goes to improve the house.

As I fit into the category of people who would consider downsizing I can tell you stamp duty is not the problem. There is a marked lack of suitable property and that shortage is driving up prices of suitable property, If I was lucky my 4 bed detached would fetch £400k a suitable 2 bed Bungalow would cost £350k and that is a semi and not as nice as my house.

Malthusian

ukcarper wrote: »

As I fit into the category of people who would consider downsizing I can tell you stamp duty is not the problem. There is a marked lack of suitable property and that shortage is driving up prices of suitable property, If I was lucky my 4 bed detached would fetch £400k a suitable 2 bed Bungalow would cost £350k and that is a semi and not as nice as my house.

Not sure what you expect. A bungalow needs twice as much land as the equivalent 2-storey house, which means a 2 bed bungalow needs roughly the same land as a 4 bed 2-storey. The land is the expensive part of the house, not the bricks. Of course a 2 bed bungalow costs only a little less than a 4 bed detached assuming it's in a similar area.

ukcarper

Malthusian wrote: »

Not sure what you expect. A bungalow needs twice as much land as the equivalent 2-storey house, which means a 2 bed bungalow needs roughly the same land as a 4 bed 2-storey. The land is the expensive part of the house, not the bricks. Of course a 2 bed bungalow costs only a little less than a 4 bed detached assuming it's in a similar area.

Not a small 2 bed semi compared to 4 bed detached . If I was comparing a 2 bed detached bungalow I would agree but that on a similar plot would cost more than my house.

But that is not really the point why would I move to a smaller semi detached property If it is not going to release any capital. If people want to encourage people like me to downsize they have to come up with something better than small flats with no storagd and high fees.

westernpromise

ukcarper wrote: »

As I fit into the category of people who would consider downsizing I can tell you stamp duty is not the problem. There is a marked lack of suitable property and that shortage is driving up prices of suitable property, If I was lucky my 4 bed detached would fetch £400k a suitable 2 bed Bungalow would cost £350k and that is a semi and not as nice as my house.

My parents fit into that category and for them stamp duty was the killer. Every other penny involved in downsizing would be going to someone who's doing something for it. Stamp duty is just a grab for which you get literally nothing. It is money completely destroyed to no purpose.

Herzlos

westernpromise wrote: »

My parents fit into that category and for them stamp duty was the killer. Every other penny involved in downsizing would be going to someone who's doing something for it. Stamp duty is just a grab for which you get literally nothing. It is money completely destroyed to no purpose.

It's not destroyed, it goes back in the tax pot. But I agree it's a (potentially) large transaction fee with no visible benefit to the buyer.