Homebuyers paid £1.1bn in stamp duty in July, with the current tax system weighed against downsizers, says Coventry Building Society.
Property buyers have paid £6.5bn in stamp duty charges over the first six months of the year, with the average bill amounting to £9,661, according to the mutual, which has studied the latest HMRC figures.
The building society says: “The current tax regime offers one-time support for first-time buyers but does little to nothing to help downsizers and could therefore deter people from moving to a property which is the right size for their needs.
“This could impact the supply of larger family homes and prevent people moving up the ladder.”
In former Chancellor Kwasi Kwarteng’s September tax-cutting mini-Budget, the zero percent stamp duty tax band was permanently raised to £250,000 from £125,000.
Also, the zero percent threshold for FTBs was raised to £425,000 from £300,000.
However, in current Chancellor Jeremy Hunt’s November Autumn Statement he said these reductions will only remain in place until March 2025.
Coventry Building Society head of intermediary relationships Jonathan Stinton says: “There are many people who want to move down the ladder as well as up, but the current stamp duty regime does more to deter downsizers than incentivise them.
“The concern here is that we’ll have swathes of people living in homes which aren’t right for them anymore. Most people will want to downsize and save money, but it could cost people thousands of pounds to end up with something which is ultimately less valuable. There could be many cases where it just doesn’t make financial sense to move.
Stinton adds: “The temporary thresholds are lightening the load for all homebuyers at the minute, but – like the stamp duty holiday before it – it’s short-term thinking which is only giving relief to buyers at a pinpointed moment in time.
“The long-term solution needs to come without a sell-by date and aim to support buyers who need to move both up and down the ladder.”
The HMRC points out that wider stamp taxes and annual tax enveloped dwellings levies — which includes charges to firms that own residential properties — fell by £2bn to £5bn between April and July compared to a year ago.
The government tax body says: “The majority of this change relates to stamp duty land tax, driven by lower transaction numbers, the lower rate of taxation and a more generous relief for FTBs introduced in September 2022.”
