One of the biggest policy changes is the raising of the inheritance tax threshold to £1million per couple. This change means that couples will be able to pass on assets of up to £1million including a family home, without paying any inheritance tax. In London where prices have soared over recent years, this is particularly welcome news.
Good news for retirees is also the fact that anyone downsizing to a smaller home will now be eligible for an inheritance tax credit, meaning that even those selling an expensive property qualify. This should encourage pensioners to downsize, freeing up space and increasing the supply of larger homes for growing families.
However as our CEO Paul Smith mentioned to me earlier, downsizing is often considered to be a ‘dirty word’ and so it’s important that we dispel this myth. In our experience, the majority of people who choose to downsize are doing so to enjoy their golden years. Releasing equity can open up a world of opportunity for travel, while providing options for a more manageable property that affords a ‘lock up and go’ lifestyle in a desirable location. With the extra cash, many owners find they can then either invest in a buy-to-let property to help fund their retirement or alternatively they are able to offer children a welcome contribution toward a first-time buyer deposit.
Our May house price monitor shows that there are now an average of 11 registered buyers for every home on sale, compared to 8 last year as demand continues to outpace supply. A greater supply of homes would have a hugely positive effect on the market so we look forward to seeing whether the new changes encourage movement in the market.