Support needed for older homeowners

Older homeowners who want to downsize are not being sufficiently supported, 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 tie them to 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 major mortgage 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, 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 RNRB 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 RNRB 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 provided shed light on timings in particular, with there being no proposed restriction on downsizing or selling from the date the RNRB was announced and any number of downsizing moves being permitted between 8th July 2015 and the date of death.

Tim Steele, partner at Palmers and part of the estate planning team, said: “Protecting assets and minimising inheritance tax for the benefit of family members is naturally among the thoughts of many senior homeowners.

“At Palmers we are experienced in dealing with this and associated issues and can advise on inheritance tax planning. For more information, please contact us.”