We can't afford to downsize! Retired couples are facing massive stamp duty bills

Simone and Jim Steele love their four-bedroom bungalow which they have lived in for 40 years.

Their back garden, a third of an acre of manicured beauty, is the talk of the street and overlooks the picturesque Preseli Hills.

‘I never get bored of the view from our garden,’ says 69-year-old Simone, a retired land charges officer for the local council.

‘The light sometimes changes by the hour, giving me an ever-changing perspective on the world beyond our four walls.’

But the Steeles, who live just outside Haverfordwest in Pembrokeshire, are getting increasingly frustrated.

With 75-year-old Jim now in poor health, they are keen to downsize to a smaller property with a more manageable garden.

Trapped: Jim and Simone Steele want to see stamp duty abolished so they can downsize from their current property just outside Haverfordwest in Pembrokeshire

Workload: The Steeles, who live just outside Haverfordwest in Pembrokeshire, are looking to downsize to a property with a more manageable garden than their current home (pictured)

The couple say their back garden, a third of an acre of manicured beauty, is the talk of the street and overlooks the picturesque Preseli Hills

Yet they simply can’t afford to do so — and one of the biggest impediments is stamp duty.

To downsize to a property they like would land them with a hefty stamp duty bill — with estate agents’ fees, solicitors’ fees and moving costs on top.

‘I am sure that if stamp duty was abolished,’ says Simone, ‘more people of our age would downsize, freeing up larger properties for younger generations to buy.’

She says that many of the homeowners in the street they live on are in a similar position — keen to move to a smaller property, but unable to do so because of stamp duty.

Like the Steeles, hundreds of readers have contacted Money Mail in the past seven days, backing the campaign we launched to get Chancellor Jeremy Hunt to cut stamp duty (or, even better, abolish it) in next month’s Budget.

Nearly all believe — like us — that its scrapping would help free up a bogged-down housing market.

It would enable people to move up the property ladder more easily during their working and family lives — and then back down it in retirement as they downsize.

The benefits would go well beyond the housing market. It would increase job mobility, allowing people to move from one end of the country to the other in pursuit of better job opportunities.

It would also be an economic boost, with people spending money on doing up their new homes.

Our campaign has already received political support.

Simone and Jim, pictured in their back garden, say downsizing would land them with a hefty stamp duty bill — with estate agents’ fees, solicitors’ fees and moving costs on top

The rear garden of the house owned by Simone Steele with husband Jim

In The Mail on Sunday three days ago, former housing secretary Robert Jenrick called on the Government to ‘cut one of the most counter-productive and anti-growth taxes’.

He added: ‘It [stamp duty] traps people in homes they want to move from and makes the elderly reluctant to downsize, which in turn leaves younger families in smaller houses.’

Unlike other tax cuts, lower stamp duty would ‘create an immediate feel-good factor’, he said.

Michael Gove, Jenrick’s successor as housing secretary, is also keen on a stamp duty cut. Last weekend, Gove said he was constantly pressing the Chancellor to introduce measures to make housing more affordable.

As well as a stamp duty cut, Gove wants Hunt to help first-time buyers via the introduction of state-backed 99 per cent mortgages.

For home movers, stamp duty is currently charged on a sliding scale with the first £250,000 of a property’s purchase price tax-free.

Thereafter, the rate jumps abruptly, from 5 per cent on the value from £250,001 to £925,000; 10 per cent from £925,001 to £1.5 million; and 12 per cent on any surplus.

So, someone moving to a house costing £500,000 must pay stamp duty of £12,500, although from April 2025 this would rise to £18,750 if the nil-rate band fell back to £125,000 as the Government said it will.

Like the Steeles, Clare Lake and her partner Allan are keen to downsize. They live just outside Falmouth in Cornwall in a five-bedroom house that they used to run as a B&B.

The front garden of the house owned by Simone Steele with husband Jim in the Johnston area near Haverfordwest, Wales

For home movers, stamp duty is currently charged on a sliding scale with the first £250,000 of a property’s purchase price tax-free

But with Clare turning 69 on Friday and Allan celebrating his 70th next week, the house is now beyond their needs, and they are keen to move closer to Clare’s brother and son in Southampton and Lymington, respectively.

‘Allan is not in great health,’ says Clare, ‘and the stairs are sometimes a struggle for him. Also, public transport in Cornwall is not brilliant and our Barclays bank in Falmouth has shut.’

Clare, a textile designer, says: ‘We have no wish to move into a shoe box, but even if we could find a three-bedroom bungalow, we’ve worked out that we would be waving goodbye to around £50,000 in moving costs, a big chunk of which would be stamp duty. Surely it is time for the Government to overhaul this unfairest of taxes?’

Clare says the Government should do more to encourage the elderly to downsize.

She explains: ‘Maybe, once homeowners reach State pension age, the Government could reduce the stamp duty yoke for them — as it does for first-time buyers.’

Currently, first-time buyers can buy a property up to £425,000 in value and pay no stamp duty. Above this value, the rate is 5 per cent up to £625,000 — properties worth more do not qualify for the relief.

A similarly large tax-free band, or a lower stamp duty rate, for retired downsizers, says Clare, would be a gamechanger.

‘It would change the mathematics of moving straight away,’ she says, ‘and free up the housing market.’

Barbara Bass, a 70-year-old retired pharmacist from Redbridge in Essex, believes stamp duty should be abolished. ‘It’s a horrible tax,’ she says.

‘You strive to better yourself by moving up the housing ladder — and the Government rewards you by slapping a tax on you every time you move. I see no justification for it. It’s like pouring money down a drain.’

Barbara says her son David is desperate to move to a larger house in Epping, Essex. He and his wife have two children, aged two and three, and while they live in a three-bedroom house, it’s hard to insulate; the garden is tiny; and it backs on to the London underground.

But they have been thwarted by onerous stamp duty costs. Barbara says: ‘In David’s case, he’s now trapped in a house inappropriate for his family’s needs.’

Research by Coventry Building Society shows that many homebuyers are digging into their home deposit to pay their stamp duty bill.

Jonathan Stinton, head of mortgage relations, says it adds ‘to the long list of reasons why stamp duty should be top of the Chancellor’s priorities next month in the Budget.’ We agree.

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I’m dodging £22k tax – by building a shed instead 

By LEE BOYCE

Home improvements: Lee Boyce

Eight years ago, my wife Danielle and I bought our first home in Rayleigh, Essex. A small but functional three-bedroom semi-detached house, it has served us well.

However, with our family about to swell from three to four upon the arrival of baby two in April, we set our sights on moving.

In our crosshairs: a detached home with four bedrooms and a utility room. The snag? We’re looking at an unaffordable price tag of at least £700,000.

The number one sticking point is that on top of this huge sum, we’d have to fork out for stamp duty — an obstacle that I believe is blocking many potential second-steppers like us. We’ve built up a nice slab of equity, save diligently and have two decent salaries coming in. But forking out £22,500 on a monstrous stamp duty bill makes what could be a step up the ladder a giant leap.

So, to dodge stamp duty, alongside potentially higher mortgage rates, we’ve opted to stay put. To improve, not move. Our new child will inherit bedroom three, the box room, which we now use as an office.

At the end of the month, a shed office is being built in the back of the garden on an existing patio area. At 10ft x 9ft, it’s a great size and comes in at £11,000.

The price includes full insulation, along with an electrician wiring it up with power, broadband and lighting. At half the cost of stamp duty, I’d much rather see our outlay blossom into a tangible asset.

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