A growing number of retirees are relying on their home to help provide for retirement, but face paying thousands to access this cash, prompting LV= to call for retirees to be made exempt from stamp duty if they downsize.
LV= has found a third (34%) of people approaching retirement are set to be ‘Property Pensioners’, relying on the money tied up in their home to live off in retirement. This is a significant increase compared to the 22% of existing retirees who have done the same.
Downsizing is the most popular way to raise money from a property , but this comes with significant costs, with the average house price triggering a £4,600 stamp duty bill .
With people living longer in retirement than ever before, LV= believes it is unfair that pensioners are being indirectly penalised for accessing the money in their home to help provide an income. Four in ten (42%) of those nearing retirement say they’d be more likely to downsize if a tax cut were introduced, so scrapping stamp duty will help ensure retirees who want, or need, to downsize for retirement planning can do so without financial penalty.
This reform could also help millions of younger homebuyers  find a family home by allowing ‘empty nesters’ to move and increasing the supply of larger homes. LV= found three-quarters (77%) of pensioners live alone or as a couple, yet two-thirds (64%) live in properties with at least three bedrooms, so may have far more space than they need.
John Perks, Managing Director of LV= Retirement Solutions, said: “More and more of us are relying on our home to help fund our retirement, yet retirees face significant costs if they choose to downsize.
“We’re calling for Government to scrap the unfairly high stamp duty costs for downsizing pensioners and provide a much-needed injection of larger homes into the market for the millions of families struggling to move up the ladder. By increasing the number of property sales, this could also increase Government’s stamp duty revenues in the long run, making it a win-win for everyone.”
The research is part of LV=’s annual State of Retirement study, which outlines the typical financial situations for retirees, before and at retirement age. The first chapter looks specifically at ‘Property Pensioners’, who rely on some income from their property when they retire, whether that is through downsizing, equity release, moving to a less expensive area or renting out a room. The full report will be released in the summer.