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CIH: Remove stamp duty to help older people downsize

From Property Talk Live on February 25, 2014

The chancellor should use next month’s budget to make better use of existing homes, increase house building and encourage higher standards of housing.

The Chartered Institute of Housing (CIH) says the government should consider removing stamp duty when older home owners who receive Pension Credit move to smaller properties, which would make downsizing more affordable for older people on low incomes and free up bigger homes for larger families.

Chief executive Grainia Long said: “When older people on lower incomes want to move from a home that has become too big and expensive for their needs, stamp duty can stand in their way. Removing stamp duty when older home owners who receive Pension Credit move to smaller properties would make downsizing more affordable and would also free up bigger homes for larger families.”

CIH said the government could also use the budget to tackle the housing crisis by taking steps to help councils build an extra 75,000 new homes, increase standards and choice in the private rented sector, and increase the rate at which homes sold under Right To Buy are replaced.

Chancellor George Osborne is due to announce the budget on 19 March.

CIH’s four-point submission calls for the government to:

– Remove stamp duty when older home owners in receipt of Pension Credit down-size to smaller properties. Removing stamp duty for older people claiming Pension Credit will make downsizing a more viable, affordable option and free up larger homes for purchase, promoting more efficient use of our national housing stock. – Allow councils to borrow more so they can build new homes.  Increasing local authority borrowing caps by £7bn would allow them to build 75,000 new homes over five years, creating 23,500 jobs and creating £5.6bn of economic activity – Look at new ways of improving standards in the private rented sector by targeting tax allowances.  Private landlords currently benefit from around £7bn of tax allowances per year for deductible expenses such as repairs and maintenance, insurance and professional fees, but these allowances do not target or incentivise higher standards. If landlords who committed to a higher level of standards benefited from an enhanced allowance, while those who did not saw their allowances stay the same or even reduce, government could incentivise higher standards without the need for additional resourcing – Amend Right to Buy rules to increase the rate at which replacement homes are built. Current rules on the money generated from Right To Buy sales mean that local authorities are often left with insufficient funds to finance the building of replacement homes. Changing the rules would ensure that councils always have enough money available to fund replacement homes while at the same time meeting the government’s target that receipts should fund no more than 30% of the cost of each new home.

Grainia Long said: “We need to build 250,000 homes a year to keep up with our growing population, but we’ve been failing to reach that target for decades – the result is a housing crisis in which millions of people are being denied access to a decent home at a price they can afford.  The budget offers the government a chance to address this and at the same time harness housing’s potential to boost economic growth.”

She added: “With more and more people living in the private rented sector – including more older people and more families with children – it’s vital that we look carefully at new ways to raise standards.

“We are concerned that the government’s claim that it can provide one new affordable home for each one sold through Right to Buy will not prove to be the case. Truly affordable housing is already at a premium – amending the rules could help increase the rate at which replacement homes are built.”

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Source: Property Talk Live