Chancellor Philip Hammond will unveil the Government’s fiscal plans on Monday next week.
Last year, he scrapped stamp duty for first-time buyers but there was little solace for those further up the housing ladder, many of whom feel trapped in their homes because of the increasingly extortionate cost of moving.
With just five days to go, reader Chris Healy put down her predicament in writing for Mr Hammond to consider. It is in full below.
Ready to move on: Home-owner Chris Healy and Daisy
Dear Chancellor, I need your help — as I suspect do thousands of others. And if you help us, then we may end up helping you. So it’s a win-win.
My problem, you see, is I’d like to downsize: first my home and then, later, my job.
I am no shirker, but I’m coming up to 67 and have been working full-time for almost 50 years, so part-time hours are starting to have a greater appeal. I’ve tried twice now to sell my house and have failed — and lost a fair bit of money in the process.
The first time, 18 months ago, the cash buyer, had agreed to pay £1million (this is the expensive South-East we’re talking about) plus £43,750 in stamp duty. We’d almost reached exchange of contracts when he stopped responding. I paid my solicitor’s bill, chalked it down to experience and moved on. Not literally, of course.
The second time, just two weeks ago, on the day before I was signing my sale contract, this time selling for £945,000, the buyers reduced their offer price by £50,000. Nice. I offered a £10,000 reduction but they remained firm and the whole deal went pear-shaped.
The result is that I now have more legal fees to pay and — if I don’t find another buyer pretty quickly — I will lose the deposit on my intended home on a new development. I can’t say punitive stamp duty charges alone are to blame for these sales falling though — but they mean there are far fewer buyers interested to begin with.
Yes, it’s a difficult market — but you, Mr Hammond, could help to change that and, may I add, perhaps improve your own prospects.
Chris Healy hopes that in next Monday’s Budget, Hammond will ‘do something to ease the burden of this pernicious tax, improve the overall health of the housing market – and benefit us all’
As the Mail reported on Saturday, high stamp duty charges on homes such as mine — it’s a normal detached family house but in a ridiculously pricey area (Datchet village, just a mile from Windsor) — are making it very difficult to sell and move on, whether you’re a would-be downsizer like me or you want to get a bigger family home or even to move to a new area, perhaps for a new job.
At £945,000 — the perfectly realistic agreed price on my five-bedroom house plus annexe — stamp duty land tax adds £38,250 to the buyers’ costs. That’s an enormous amount for any normal family to find, and it means more people are deciding to stay put.
Buyers will often stretch themselves financially to achieve a bigger family home, but the huge stamp duty charge makes it a stretch too far. Now I see that our difficulties as sellers are causing you, as Chancellor, some problems, too.
With fewer of us moving, the Treasury is facing a £1billion drop in stamp duty from property sales this year. Of course, it’s not your fault: it was your predecessor, George Osborne, who hiked stamp duty on so-called ‘high-end’ homes like mine four years ago in order to boost the tax take.
His tactic has backfired — and, worse, it’s causing the housing market to stall. By making it harder for homebuyers to move up the ladder, it ultimately cuts the number of properties available to first-timers.
I know it’s been mooted in some quarters that downsizers like me get some extra relief on stamp duty to free up large family homes — but that’s not really the issue.
It’s the upsizers who need some help. Without it, the market will remain clogged, with our inability to sell and move, and eventually stagnate. In my road of 20 houses, four of us would-be downsizers have tried to sell in past 18 months — without success.
Nor do I think I was being unrealistic in my sale price. This time around, I’d asked for £975,000 and accepted my buyers’ offer of £945,000. They were a big family, and the deal would have allowed them to stop ‘wasting’ more than £2,500 a month on rent while I could have paid off my still-large mortgage and moved to a slightly cheaper area.
I was so optimistic this time that half my possessions were already packed in boxes. I was buying new, from Berkeley Homes, and we were under pressure to complete by October 31.
Anyway, it’s a buyers’ market, it seems, and I may have to content myself with unpacking the boxes and staying here for a while longer.
I confess it’s no hardship. It’s a lovely home with a pleasant garden and if desirability is based on location, location, location, then it’s got all three. It has great transport links yet it is on a quiet residential road leading to a golf course, close to a picturesque stretch of the Thames that has views of Windsor Castle.
But my two daughters have moved out (with my financial help, hence my continuing mortgage) and the house and garden are now far more than I need. To be honest, I feel almost ‘greedy’ if I stay here. It’s a lot of space for just me and a small dog called Daisy.
I’ve also learned that anyone buying my house can, in all probability, reduce their stamp duty payment because there is also a self-contained annexe or granny flat. The way Multiple Dwellings Relief works, the total selling price is divided in two and Stamp Duty Land Tax paid on each half.
It means anyone buying my house for £945,000 and expecting to pay £38,250 stamp duty, will, if it’s their main property and they don’t already own another property, save themselves £21,000.
Most people buying a house with a similar annexe can do the same. But many who don’t know about this perk might be put off even looking at such properties because of their anticipated stamp duty bill. And it does nothing to help the majority of upsizers who won’t be buying homes that qualify for the relief.
Having already lost around £4,000 in legal costs and the deposit for what would have been my new home I’m reluctant to cut the price any further as I will need to keep money back for my retirement.
Anyway, I’ve left my house on the market with Romans for now in the hope, Mr Hammond, that in next Monday’s Budget you do something to ease the burden of this pernicious tax, improve the overall health of the housing market — and benefit us all.