Financial constraints on older homeowners are tying them to properties which would otherwise provide redevelopment opportunities, the Council of Mortgage Lenders says.
The body believes the Government is putting too much emphasis on helping younger people onto the property ladder, overlooking the issues faced by many retirees which keep them in homes with a surplus of rooms.
Amid fresh calls to scrap stamp duty for the over 65s, Moray McDonald, the council’s chairman, says there is an onus on mortgage lenders to be more flexible in their terms.
Explaining that just one per cent of the nation’s five million retired homeowners had moved house in the space of 12 months, he told a conference: “It means those homes are not released for families or indeed the redevelopment for the kinds of housing those older people would like to live in.
“It also blocks the passing of family capital to younger generations which we know would enable more people to buy sooner.”
In a related development which could ease the situation, HMRC has provided further details of the proposed workings of a new residence nil-rate band (RNRB) for inheritance tax.
The move is part of an ongoing consultation on how the RNB will apply where a homeowner downsizes – or relinquishes ownership of – their main property before passing it on to a direct descendant.
It follows a Summer Budget which announced that the RNB will come into effect from April 2017 as an additional allowance to the current IHT tax-free threshold of £325,000.
The proposed measures relating to downsizing are intended to avoid homeowners being discouraged from switching to a less valuable property in order to save inheritance tax.
The additional details shed light on timings in particular, with there being no proposed restriction on downsizing or selling from the date the RNRB was announced. In effect, any number of downsizing moves are permitted between 8th July 2015 and the date of death.
Palmers partner Adam Davis, who specialises in construction matters, said: “What we are seeing here is a range of incoming legislation affecting different sectors at once, which can make already complex matters seem more confusing.
“In this instance, there may be some manoeuvrability for developers down the line, but it really points to a landscape in flux and therefore the need to find plain advice from experienced professionals. For more information about the services we can provide, please contact us.”