Earlier this week, Chancellor Rishi Sunak announced a range of measures to help support the economy, among them a stamp duty holiday. Property purchasers will now only pay the basic rate of stamp duty on any value above £500,000, up from £125,000.
Reducing the barriers to moving should help free up transactions across the whole market. But we believe it has a particularly strong impact on those looking to downsize. Senior living could be among the beneficiaries of the Chancellor's announcement.
Stamp duty is just one of the barriers to moving home: many buyers also face the challenge of securing mortgage finance. Downsizers don't face this hurdle. Having built up equity in their homes, they're generally able to buy their next home outright. Savills analysis shows that homeowners aged over 65 own £1.6 trillion in housing equity. A stamp duty holiday could be the cue for some to unlock that wealth.
As a way to spend that cash, retirement communities have a lot to offer. Early reports from operators suggest Covid-19 infection rates were far below the national average. They're also able to provide support and community more easily than non-specialised housing for residents who are isolating. A safer, more comfortable housing option is likely to be particularly attractive for older households following the experience of shielding.
For some households, the stamp duty holiday will mean a more active market that helps them to sell their family home quicker. Others may chose not to sell their family home, opting instead to let it out and use the rental income to subsidise their housing costs in a retirement village. More and more operators have started offering homes to rent to help attract these households.
However, the window of opportunity is short. The stamp duty holiday will come to an end on 31st March 2021, just over seven months away. With luck, that will give many households the help they need to move into the supportive, safe environments that retirement communities can provide.
Originally published by Lawrence Bowles Director at Savills Research.
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