Cut stamp duty for last-time buyers, to fix housing crisis, says senior Tory

Retirees should be given a stamp duty cut for downsizing to free up more homes for families, a senior Tory has said.

Giving “last-time buyers” a tax incentive to move out of under-occupied homes could hold the key to fixing Britain’s housing shortage, according to former Cabinet minister Damian Green.

The idea could be considered by an older people’s housing taskforce, which the Government is expected to launch as early as this week.

Mr Green argues that attempts to address the shortage by building new houses for young people and creating “financial packages to subsidise them buying these homes” has “not really worked” in a new essay to be published on Monday.

He warns that “however much new housing stock we build each year, it is dwarfed by the number of existing homes” – a figure that reached 25 million in 2021.

Instead, “the trick is to have more of the existing stock occupied by families who really need that kind of house”.

“If more older people could confidently move out of their big family homes” this would allow homes to be passed on to “families who would occupy more bedrooms”, he says.

This would in turn free up smaller houses, which would then be available for “traditional first-time buyers”.

Fifty thousand fewer new homes would be needed each year if people lived in homes that were “appropriate for their needs”.

To encourage retirees to downsize, Mr Green suggests that the Government should look at using the tax system as a “possible lever”.

‘Encouragement for people downsizing’

“We have been ingenious over the years in creating incentives, such as reductions in stamp duty for first-time buyers,” he says. “Why not have similar encouragement for people downsizing out of an under-occupied family home?”

“There is probably a better phrase than ‘last-time buyers’, but, however you describe them, they hold the key to unlocking activity throughout the housing market.”

Mr Green, who served as Theresa May’s deputy when she was prime minister, makes the argument in a new collection of essays on how to solve the housing crisis, which will be published by the Bright Blue think-tank on Monday.

The Telegraph understands that mortgage lenders have separately mooted the idea of a stamp duty cut for downsizers as a solution to the housing crisis.

Older people’s housing taskforce

The Government is shortly expected to launch an older people’s housing taskforce.

A Whitehall source said: “Older people’s housing is an extremely important area for this Government, and we are committed to improving the supply and diversity of housing options available to older people.

“The older people’s housing taskforce will look at ways we can provide greater choice, quality and security of housing for older people, and support the growth of a thriving older people’s housing sector in this country.”

The taskforce will aim to unlock private investment in new developments for retirement housing.

It is expected to run for up to 12 months and will produce an independent report with recommendations for the Government on driving an increase in the volume and range of housing options for older people.

‘Seriously under-supplied’

In his piece, Mr Green argues that the other side of the equation to free up more family homes would be to provide more “housing that is suitable for those who have retired” – something that is “seriously under-supplied at the moment”.

According to the essay, the UK has about a tenth as much specialist retirement housing as countries such as the US, Australia and New Zealand.

To address this, Mr Green says the Government could dedicate a percentage of properties on larger developments to specialist retirement housing.

He highlights a need to tackle the “image problem” of retirement housing, which is “often confused with sheltered housing or even ‘old people’s homes’” despite this being an “outdated view of what is on offer today”.

As well as having a “liberating effect” on the housing market, Mr Green says that providing more specialist retirement homes would benefit the public purse.

Research by WPI Economics found that an individual living in a retirement community saves the health and care system around £3,500 a year through fewer falls, reduced loneliness, delaying the onset of dementia, quicker detection of strokes and lower use of health and care services.