Currently, we have a chronic shortage of homes, and it seems as though this is getting worse because successive governments on both sides have failed to have a coherent and long-term planning and housing strategy.
As a result, regardless of all the plans and schemes that are available to help people buy, we aren't getting the number of housing starts we require, BTL landlords have taken a large swathe of the stock, and we have a growing and ageing population.
There are approximately 13 buyers for every property that comes to market, pushing prices up further, into bubble territory.
The shortage of housing stock won't be solved overnight; however, last year, the Chancellor kick-started the housing market with the stamp duty holiday, which encouraged thousands more people to sell and buy.
To alleviate the current housing shortage, we need to incentivise owners at the top of the chain to sell; however, the costs of moving when considering estate agents' fees, legal expenses, and stamp duty put many older people off downsizing. Why would they move to a smaller home if it's going to cost thousands in tax?
However, if the people at the top of the pyramid aren't selling to downsize, this impacts the chain.
So, rather than incentivising new or second step buyers, why not incentivise older people to move, which should free up more family homes and help alleviate the blockage?
To do this, it would need to be relatively well-targeted. But if the over 60's or anyone of state pension age could sell and buy without incurring stamp duty, this may encourage more downsizing to free up family homes which are desperately needed.
To stop this from being taken advantage of by landlords or speculators would be straightforward in that stamp duty need not be paid if you are replacing your residential property.
However, it cannot be for purchasing an additional property. It must only be when the sale of your residential property and a subsequent purchase have taken place. Solicitors could easily administer this to determine what stamp duty level should be payable.
It may also pay to amend capital gains tax on the sale of additional properties. Given that the tax treatment of landlords is harsher than it once was, many landlords would consider selling. However, many are reluctant to sell due to the CGT liability.
If we have a CGT holiday on the sale of additional homes, you'd likely see more stock on the market, which are the type of houses that first-time buyers typically look for.
The combined effect of this pincer movement to increase stock levels at both the top and bottom would be that upward pressure on rents diminishes, which is positive during a cost of living crisis, and family homes becoming available at the top and first-time buyer stock available at the bottom. All of this would re-energise the property market while simultaneously tempering rising house prices protecting all of us from the consequences of a price correction.
We need decisive action to alleviate the chronic shortage of stock that is blighting the property market.