Stamp Duty Land Tax (Reduction) Bill
Monday 24th October 2022
(1 year, 6 months ago)
Commons ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2023 Read Hansard Text Read Debate Ministerial Extracts
19:50 - The House divided: - Ayes: 288 / Noes: 152 - Question accordingly agreed to.
The Exchequer Secretary to the Treasury (Felicity Buchan)
I beg to move, That the Bill be now read a Second time.
We face challenging times, and challenging decisions need to be made, but one thing on which I hope we can all agree is that home ownership must remain within reach, and we must support the property market where we can. To do that, we are making good our promise to ensure that hard work is rewarded and people can keep more of their hard-earned money when they buy a home.
The property industry plays a hugely important role in our economy. It is crucial to our growth prospects, and it supports hundreds of thousands of jobs and businesses. Home ownership remains one of the surest ways to give people a stake in the success of our economy, and we know that stamp duty really affects people’s decisions on whether to buy a property. The Bill confirms a significant reduction in the cost of moving home and getting on the housing ladder, which will allow more people to buy and to move each year. It will also mean more business for painters, decorators, moving companies, plumbers, electricians, and all the industries that are reliant on a healthy housing market. More transactions each year will mean that more people can move more easily to find work, and that will boost labour mobility at a time when people do not need barriers to changing jobs.
Like many Members on both sides of the House, I grew up in a country where home ownership was a dream, but an achievable one. It is only right that we give those who are now seeking to climb on to the housing ladder a helping hand, so that this dream does not slip out of reach. Since 2010, we have helped more than 800,000 households to purchase homes through Government-backed schemes such as Help to Buy and Right to Buy, and we have made sure that stamp duty land tax works for those who wish to get on to and up the property ladder.
First, in April 2016, we introduced the higher rates of stamp duty for those purchasing additional properties, which form part of the Government’s commitment to first-time buyers. These rates are 3% above standard residential stamp duty rates. The following year, in the 2017 autumn Budget, we introduced first-time buyer relief to permanently increase the price at which first-time buyers start paying stamp duty. The Government are proud that nearly 700,000 purchases have benefited from this relief since its introduction. Because of our action, the annual number of first-time buyers is at a 20-year high.
However, this is not just about how we help people purchase within the existing stock of housing; we are also boosting investment in home building and affordable housing. In 2019-20, nearly 243,000 net additional dwellings were delivered—the largest number in almost 20 years—and the Government are on track to meet their commitment to deliver 1 million additional homes during the current Parliament. In the 2021 spending review, we also announced £11.5 billion for the affordable homes programme to build 180,000 more of the affordable, quality homes that the country needs, including tens of thousands for social rent.
The Government’s cuts in stamp duty land tax were implemented on 23 September with immediate effect, and we have introduced the Bill to confirm that change. Stamp duty applies to purchases of property or land in England and Northern Ireland, with land transaction taxes devolved to Scotland and Wales. Devolved Administrations will receive Barnett consequentials for that change, in the usual way. The Bill will increase the nil rate threshold, which is the level at which stamp duty starts to apply. It will double the threshold at which people start paying stamp duty from £125,000 to £250,000, saving a family purchasing an averagely priced home £2,500.
As I mentioned a moment ago, in 2017 the Government introduced first-time buyer relief, which applied a higher nil rate threshold for purchasers who had never previously owned a property as part of our commitment to supporting first-time buyers. The Bill will expand the generosity of that relief to ensure that those purchasing their first home pay no stamp duty on purchases up to £425,000, up from £300,000. The maximum purchase value for which first-time buyers can claim the relief has also been increased, from £500,000 to £625,000.
These cuts in stamp duty will mean that an estimated 43% of transactions each year will attract no stamp duty whatsoever, up from 25% before the introduction of the Bill. No one purchasing a second home or investing in a buy-to-let property will cease paying stamp duty, as the 3% surcharge on the purchase of additional dwellings will continue to apply. More than half all transactions in the east midlands, the north-west and Yorkshire and the Humber will attract no stamp duty at all, with about six in ten transactions in the north-east having no stamp duty liability.
We are lifting significant numbers of families, first-time buyers and home movers out of stamp duty, helping those aspiring to own their own home. That means that a couple buying an average home in the east midlands worth about £248,000 would otherwise have paid nearly £2,500 in stamp duty, but will now pay nothing at all. This measure will directly help people to keep more of their hard-earned money. An estimated 90% of those claiming first-time buyer relief will now be lifted out of stamp duty entirely. First-time buyers are able to access up to £8,750 in relief following the Government’s changes.
I should make it clear that these changes apply to stamp duty land tax, which covers only England and Northern Ireland, but they also mean—through the usual block grant adjustment—an additional £100 million for the devolved Administrations in Scotland and Wales.
The United Kingdom has always been a nation of homeowners, and under our plans it will continue to be so. We are cutting stamp duty for hard-working people and supporting them in getting on to and up the housing ladder. The Bill will reduce the up-front costs of moving, it will support the hundreds of thousands of jobs reliant on a healthy property market and it will help give people who aspire to home ownership the means to make it a reality. For those reasons, I commend the Bill to the House.
James Murray (Ealing North) (Lab/Co-op)
Yesterday was one month since the previous Chancellor delivered his mini-Budget. Since then we have had a month of utter chaos, a month of the most extraordinary U-turns and a month in which the Conservative party recklessly inflicted damage on our economy—damage that the British public will be paying for and that will take years to fix, yet the Conservatives are clinging on to power, putting their party’s interest before the country’s. We are here today debating one of the very few remaining pieces of the former Chancellor’s mini-Budget.
As hon. and right hon. Members will know, the current Chancellor—I assume he is still in post as we speak—U-turned on almost all his predecessor’s plans. One of the measures he decided to keep was lifting the cap on bankers’ bonuses. It is particularly hard to understand why he chose to do so when even bankers themselves do not seem to have been advocating for it. In fact, it could involve reputational damage that I know many of them fear. None the less, lifting the cap remained a priority for the previous and current Chancellors.
As we know, the current Chancellor also decided to keep the legislation that reversed the national insurance rise and repealed the health and social care levy. We are glad that the Government finally followed the position that Labour set out over a year ago that raising taxes on working people in a cost of living crisis is wrong. The decision to reverse the national insurance rise was itself a U-turn by the current Chancellor, the outgoing Prime Minister and their colleagues on the position they held just last year. At least by doing the right thing the right hon. Member for South West Surrey (Jeremy Hunt) avoided doing a U-turn on a U-turn in this particular instance.
The current Chancellor also decided to keep the changes to stamp duty that were announced on 23 September and that we are debating today. Under these changes, which are the subject of the resolution we have just debated and the Bill that is now to be read a Second time, the nil rate threshold for stamp duty payments on residential properties is increased, effectively by removing the existing lowest band. There are consistent changes to the higher rates for additional dwellings and changes to the threshold and limits for first-time buyer relief.
Before I address the substance of the proposed changes, I would like to ask the Minister about the process of the legislation before us. In the business of the House statement on Thursday 13 October, the Leader of the House of Commons said that we would today be debating
“a resolution relating to stamp duty land tax (reduction), followed by all stages of the Stamp Duty Land Tax (Reduction) Bill.”—[Official Report, 13 October 2022; Vol. 720, c. 258.]
Four days later, the current Chancellor confirmed that the stamp duty changes would proceed. However, during her next business of the House statement on 20 October, the Leader of the House said that we would no longer be considering all stages of the Bill today, only its Second Reading. That most recent statement by the Leader of the House did not set a date for the Bill’s remaining stages. What message does that send?
Treasury Ministers will know that, across the country, families and businesses are crying out for stability. In the housing market, as in many parts of the economy, certainty is prized. That is why, when the stamp duty cut was announced, it took effect straight away. It had to be in place immediately to avoid giving people a reason to delay their home purchases as they waited for an announced change to come into force. Indeed, the policy paper published alongside this announcement on 23 September confirmed that no consultation had been carried out on the measure. The reason stated was:
“It would not be in the public interest to consult, as this may have an adverse effect on the housing market if buyers delayed purchases during the consultation period.”
Yet now, the remaining stages of the Stamp Duty Land Tax (Reduction) Bill have been delayed.
This last-minute flip-flop of parliamentary business sends the message that it is open to the new Prime Minister and whoever his Chancellor might be to change their mind over these stamp duty changes. By delaying the Bill’s remaining stages, the Government have introduced more uncertainty into the housing market, which is the last thing anyone needs. I do not know what the Economic Secretary to the Treasury, the hon. Member for North East Bedfordshire (Richard Fuller), will be able to say that will give homebuyers any confidence in this matter, but I urge him to try to give them and the housing sector whatever assurances he can.
I fear that the Government have learned nothing from the mistakes they made two years ago about uncertainty when it comes to stamp duty. As hon. Members may remember, when stamp duty was last changed in the summer of 2020, the legislation was rushed through Parliament earlier than planned. This happened after someone thought they were being clever by briefing the press about the plans of the then Chancellor—now the incoming Prime Minister—three months ahead of their being implemented. In that debate, the former Member for South West Hertfordshire and Chief Secretary to the Treasury, David Gauke, was quoted as having said that this trailing of plans months ahead would be “hugely counter-productive”. He said that even “two days of speculation” over such plans would be “unhelpful”. So this concern is nothing new. It is crucial that stamp duty changes are not left hanging. Decisions either way must be executed swiftly and with certainty. These last-minute changes to parliamentary business seem to be another reminder that the Conservatives are not fit to govern.
As I said in the previous debate, it would be easy for us as the Opposition simply to vote for the stamp duty cut today, but it would not be right and it would not be responsible. At a time when our economy is reeling from the long-term damage the Conservatives have done, when current and future homebuyers are facing spiralling and prohibitive mortgage costs and when we are still flying in the dark as the Tories refuse to publish the Office for Budget Responsibility’s forecasts, this is not the time to spend £1.7 billion a year on this tax cut.
There is so much else the Government could be doing to support the housing market and to help people to get a secure and decent home that they can afford. Beyond restoring financial stability, they could go further and adopt some of our plans to introduce a mortgage guarantee scheme, to raise stamp duty for foreign buyers and to give first-time buyers first dibs on newly built properties. Those are some of the plans we need after 12 years under the Tories, during which home ownership rates have fallen. Compared with when the Conservatives came to power in 2010, there are now 800,000 fewer households under 45 who own their own home. At the same time, nearly 1 million more people are renting privately. Some of them might once have been hopeful that the Government would deliver on their commitment to ban no-fault section 21 evictions, but that promise was made more than three years ago. It was pushed into the long grass, and it was rumoured a few weeks ago that it was about to be dropped. Now, with a new Prime Minister coming through the revolving door, its fate is anyone’s guess. The only safe conclusion is that the Tories cannot deliver the security, stability and affordability that people need.
This debate is focused on the stamp duty changes that the Government are seeking to approve, but it cannot be taken outside the context of their disastrous mishandling of the economy. After 12 years of failure, the Conservatives have shredded any claim to economic competence they might once have thought they had. We are suffering an economic crisis created in Downing Street. The damage has been done and working people are paying the price. The Conservatives can rearrange the personalities in Downing Street, but they have inflicted damage on our country and have no mandate to govern. It is time for the British people to have a say on our country’s future. It is time for a fresh start with a Government who are ready to sort out the Tories’ mess, to grow the economy for working people and to build a fairer, greener future. It is time for general election.
John McDonnell (Hayes and Harlington) (Lab)
I will be extremely brief and fulfil my commitment to the shadow Secretary of State for Levelling Up. The reason I rise to speak is that I met a group of constituents at the weekend and I said that I would use this debate to identify and explain the situation that they are facing in my constituency. I have listened to the Minister and to the sentiments that she put forward, which are well intentioned in many ways but do not reflect the reality of what my constituents are facing at the moment.
We have a housing crisis in my constituency, with overcrowding on a level we have not seen in maybe decades. We have homelessness, and there is no longer access to housing via council housing because our council housing stock has mainly been sold off. I do not think any new council houses have been constructed directly by the council.
The problem we face is that wage levels, after 12 years of austerity, mean that most of my constituents, particularly the young ones, are nowhere near striking distance of being able to purchase their own home, despite everything we have done, working with the financial sector, to encourage them to do so. Many people living in the rented sector and hoping to purchase their own home are seeing their wages devoured by the rents they have to pay. They cannot save up for a deposit, and when they look at mortgage rates, particularly after what has happened over the past few weeks, they have no hope of being able to cover mortgage costs.
Frankly, this Bill is no help whatsoever to my constituents. It is interesting to look at who it does help. When the former Chancellor, and soon-to-be Prime Minister, introduced similar measures during the pandemic, they benefited corporate landlords and the banks. I have 4,000 new properties being built in my constituency, and most of them will go to corporate landlords. Many will go to people moving from outside the area because of the Elizabeth line, and few will benefit local families or local young people.
We are seeing a boom in private landlordism in my constituency, where the buy-to-let property experience is one of high rents, poor maintenance and harassment by landlords, who are often completely unregulated. The Minister and the Government have said much about the Bill helping first-time buyers and about the doubling of the threshold benefiting all, but the Bill will largely benefit landlords and the banks that lend to them. As the hon. Member for Westmorland and Lonsdale (Tim Farron) mentioned, the Bill will also benefit second home purchasers.
I find it extraordinary that incorporated landlords can still offset 100% of their mortgage interest against profits. Between 1990 and 2020, we saw 41,700 landlords incorporate themselves in order to benefit from what is actually a tax-avoidance scheme. My hon. Friend the Member for Ealing North (James Murray) mentioned the cost of this programme in the previous debate. On the estimate made on the day of the mini-Budget a few weeks ago, the cost is £1.655 billion. I find it hard to see how this is compatible with what the new Chancellor is saying about a new wave of austerity having to be forced upon us because of the mismanagement of the economy in recent weeks.
The Opposition will oppose this Bill, and I fully agree. This is not the time for such a measure. We could assist first-time buyers to get on the housing ladder through housing supply and reducing overall property costs. If the Government insist on proceeding with this Bill, we could protect the first-time buyer measures by paying for them through an excess profits tax on the landlords and banks that are profiting from the Government’s measures.
Finally, I repay the debt I owe my constituents from the weekend by saying that this Bill will not help people in my constituency. We need a new council house programme, a reduction in interest rates and investment in housing on a scale never seen before. We need housing that is accessible and affordable to all. Otherwise, I will have more homeless people, more people living in overcrowded properties and, yes, more people sleeping in beds in sheds trying to survive the next winter.
I plead with the Government to drop the Bill. I hope the incoming Prime Minister will not see this as a priority and that at next week’s Budget we will have a more rational debate about housing policy.
Tim Farron (Westmorland and Lonsdale) (LD)
The housing crisis in this country is huge, and it is more than just an issue of supply. In my community, as I mentioned in the previous debate, a catastrophe has emerged over the past two years. I have never seen such appalling need. The average house price in my constituency is something like 12 times the average household income. The simple fact is that any benefit from this Bill will help, if we are lucky, a fraction of 1% of people who want to buy a house but are currently unable to do so.
This Bill is not a very good use of public money when we are in the throes of a Conservative Government heroically seeking to do their best to counter the impact of a Conservative Budget. This Bill is a surviving element of that disastrous Budget. It does not seem to be the best use of money, given that the majority of beneficiaries will be wealthy people who do not need a stamp duty cut. What it will do, as we said in the previous debate, is fuel a second home boom that is already causing a huge amount of damage to communities like mine.
I asked myself why this Bill is one of the few survivors of the disastrous mini-Budget. I can only conclude that it is because the people who are damaged and offended by it live in rural communities, so the Government feel that they can take them for granted. I put it on the record that these people will not be taken for granted. Again, the average house price in my community is spiralling towards £300,000, but people’s incomes are significantly less than £30,000 per household, never mind per individual. When there are things the Government could do to address the affordable housing crisis, it is all the more frustrating to see such a blunderbuss waste of public money.
The Government are talking about changing planning law so that developers do not need to provide affordable housing in developments smaller than 50 homes. Well, most developments in communities such as mine are smaller than 50 homes, so there will be a carte blanche for developers never to build another affordable home in the lakes and the dales, or in communities not dissimilar to yours, Mr Deputy Speaker.
I gave the Government an opportunity in the Levelling-up and Regeneration Bill Committee, which they refused to take, to give themselves and planning authorities the power, in extreme circumstances—those of us living in national parks absolutely are in extreme circumstances—to say that only affordable housing can be built in new developments. Even under existing rules, developers wriggle out of their affordability requirements and obligations by using viability assessments. They go to the development site and say, “I found a few more rocks than I was expecting. I therefore cannot afford even the 35% affordable homes that we were going to build.” Again “affordable” has a rather broad definition.
The Government could be doing a whole range of things with both new stock and existing stock. Why will they not accept the proposal I made in this place and in the Levelling-up and Regeneration Bill Committee, and will be making again, to change planning law so that second homes and holiday lets become separate categories of planning use? We could then keep a lid on the number of second homes and holiday lets in communities like mine.
It is very hard to support a proposal that is the sole straggling survivor of a disastrous mini-Budget when one suspects that the only reason it has survived is because the people hurt by it are living in communities that the Government think they can take for granted. Well, they cannot and must not be allowed to take them for granted. I am sure we will see a revised fiscal programme from the Government in the next few days, so we wait to see what it contains. I do not understand why they are clinging on to this proposal, which will do such little good even for those it helps and such harm to those it harms, when they have the chance to think again. I strongly urge them to do just that.
Mr Deputy Speaker (Mr Nigel Evans)
We now come to the wind-ups. I call the shadow Minister, Tulip Siddiq.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
I thank the hon. Member for Westmorland and Lonsdale (Tim Farron) for his speech. I agree with him wholeheartedly that very few people will benefit from this Bill, which does not seem to be the best use of public money.
I congratulate my right hon. Friend the Member for Hayes and Harlington (John McDonnell) on his typically powerful speech about the problems of overcrowding and homelessness in his constituency, and about the impact on young people who are struggling to get a foot on the housing ladder. I am sure that the constituents he met will be grateful that he has aired their concerns on the Floor of the House.
As my hon. Friend the Member for Ealing North (James Murray) made clear, Labour does not oppose the principle of additional support for homeowners and buyers. Indeed, I have seen at first hand in my constituency of Hampstead and Kilburn how the link between wages and house prices has completely broken down in recent years. It has become increasingly hard for many of my constituents to move up the housing ladder, as my right hon. Friend the Member for Hayes and Harlington pointed out. As a result, home ownership has gone down dramatically in my constituency since 2010, with private renters now accounting for 30% of the population in Hampstead and Kilburn. Across London, average private rents have risen by over an astonishing £4,500 a year compared with the position in 2010, which is miles ahead of my constituents’ average wage growth. As we have heard today, this problem is not limited to London and the south-east; 12 years of this Government has created a dysfunctional housing market in every part of the country. Tragically, after what was already 12 difficult years for first-time buyers, the Conservatives’ reckless approach to the economy has now made things even tougher for young families looking to buy their first home, and for working people struggling with their mortgage payments.
After the Government’s mini-Budget crashed the economy, 40% of mortgage deals were withdrawn from the market and mortgage rates in fixed two-year deals rose to an average of more than 6%. It is important not to forget the real-world consequences of the decisions made in this House: people looking to refinance a two-year fixed mortgage will now be paying £580 more per month, on average. That is an astonishing amount of money. For families already struggling with the worst cost of living crisis in a generation, an additional £580 a month in living costs could be crippling.
I hope the Government are taking note of the figures I am talking about, because they are not just figures; they are about real-life people who are struggling to make ends meet. Indeed, Oxford Economics estimates that if interest rates remain at the levels currently being offered, thousands of families could be facing negative equity and mortgage arrears. The Bank of England has forecast that the number of households struggling with their mortgage rates will hit a record high next year.
What is the Government’s response to the chaos they have caused in the housing market? It is even more uncertainty. As my hon. Friend the Member for Ealing North said, the Government’s last-minute decision only to give the Bill its Second Reading today sends a message to the housing market that Treasury Ministers are once again preparing for a U-turn. I would be interested to hear from the Minister today whether he believes that this time next week a stamp duty cut will still be Government policy, or whether the Government will once again follow Labour’s advice and drop this ill-thought-out proposal.
My hon. Friend the Member for Ealing North was completely right to point out that this plan will do little to help people take their first important step on to the housing ladder and that it is just another Government handout for wealthy landlords and second home owners. Labour is the true party of home ownership, which is why we have committed to a target of 70% home ownership across the UK. We will achieve that by looking at reform of the planning system to increase house building. Because if the Government keep inflating demand without increasing supply, house prices will only rise.
Our approach will mean giving first-time buyers first dibs on newly built homes and an end to buy-to-let landlords and second home owners getting in first. We will provide additional help for first-time buyers though our mortgage guarantee scheme and introduce a higher stamp duty for foreign buyers, to prevent overseas investors from buying up property and pricing out British households. Finally, we will review planning regulations so that speculators cannot prevent communities from getting shovels in the ground and building the homes they need to thrive.
If this Government were serious about support for first-time buyers, those are the sensible and costed policies they should also adopt for themselves. But this Government are not serious about home ownership and, as we have seen in recent weeks, not serious about fiscal discipline. After the damage that the Conservatives have caused to our economy with their disastrous mini-Budget, the country simply cannot afford a £1.5 billion handout to rich second home owners and buy-to-let landlords. That is why I want to echo the point made by my hon. Friend the Member for Ealing North that it would not be fiscally right or responsible to support this stamp duty cut today, because not only are we the party of home ownership; we are also concerned about economic competence and fiscal responsibility.
Our proposals to support first-time buyers are fully funded, whereas the Government have refused even to publish the Office for Budget Responsibility’s forecasts for their plans. Our proposals will help first-time buyers to get on the housing ladder, whereas the Government’s proposals will help only the rich. Our economic plan would provide stability and security, whereas the Government offer only economic incompetence and uncertainty. The Minister was worried that we were using up our big hits for this debate. He does not need to worry, because we are saving our big hits for the election campaign, which we hope will be very soon.
The Economic Secretary to the Treasury (Richard Fuller)
I thank Members for their contributions to the debate. At its start, my hon. Friend the Exchequer Secretary to the Treasury set out the critical importance of the Bill and the Government’s cut to stamp duty land tax. The Bill is important to home movers and to first-time buyers; it is important for jobs and businesses connected to the property industry; and it is important for our economic growth. Stamp duty land tax at high levels can reduce a household’s willingness to move. This tax cut will enable more people to move home each year, which will, in turn, boost economic growth through the businesses and jobs the property industry supports.
The Labour Opposition spokesman, the hon. Member for Ealing North (James Murray), made points about the cost of mortgages due to recent economic uncertainty and interest rate rises. I just point out to him that interest rates and mortgage rates have been rising since last autumn in response to global trends, including Putin’s illegal invasion of Ukraine, and the UK is not immune to these trends. Crucially, interest rates are not solely rising in the UK; the US Federal Reserve has been raising its base rate since March 2022.
Karl Turner (Kingston upon Hull East) (Lab)
I just want to be clear: how sure is the Minister that the new Prime Minister is not going to overturn this stamp duty stuff?
Richard Fuller
I am more sure of that than I am that I will be in my position tomorrow. This is a serious debate and an important point about mortgage rates has been made. I am just trying to point out the two issues: rates have been rising since autumn; and this is a global change in interest rates.
Our stamp duty cuts will help the situation by reducing the up-front costs of moving. This Bill will save a family moving into an average home in England £2,500. As the Exchequer Secretary mentioned, we are returning money that can be spent to help cover moving costs, improvements, new furniture or appliances.
The Opposition spokesman asked questions about the processing of the Bill, but he missed the fact, of course, that the stamp duty change is already in effect and the Government are continuing with the legislation. The right hon. Member for Hayes and Harlington (John McDonnell) made some good points about house building. I just point out to him that in 2019-20 almost 243,000 net additional dwellings were delivered, which was the highest amount in nearly 20 years; and that at the spending review 2020-21 the Government confirmed £11.5 billion of funding for the affordable homes programme from 2021-22, which is the largest cash investment in affordable housing for a decade and is providing up to 180,000 new homes across England.
The hon. Member for Westmorland and Lonsdale (Tim Farron) repeated the points he made earlier about issues to do with purchasing additional property. I just repeat that the Government’s stamp duty cut will ensure that about 43% of purchases each year will pay no SDLT whatever and that none of those will be purchases of second homes or buy to lets.
The hon. Member for Hampstead and Kilburn (Tulip Siddiq), in closing for the Opposition, said that the Government somehow seem to be encouraging foreign buyers and she talked about introducing a charge for foreign buyers. I just remind her that there is already a 2% charge for non-residents on SDLT.
Let me conclude by reminding this House of what this Bill is all about. It will mean that about 43% of transactions—
John McDonnell
Will the Minister look at the issue of the 100% offset that incorporated landlords now have against profits?
Richard Fuller
Of course I am happy to look at all suggestions, including the one the right hon. Gentleman has made.
This measure will mean that around 43% of transactions each year pay no stamp duty whatever, which will help to support the housing market. I say to both Opposition spokesmen—the hon. Members for Ealing North and for Hampstead and Kilburn—that as result of this measure first-time buyers in their constituencies who would not have qualified for zero stamp duty will now qualify, and Labour will today be voting against that. I would also say to the right hon. Member for Wolverhampton South East (Mr McFadden) and the hon. Member for Leeds West (Rachel Reeves), the shadow Chancellor, who are not in their places, that the average mover buying the average house in their constituencies would not have qualified for zero-rate stamp duty land tax before this measure, and Labour will again be voting against that tax cut today.
This measure will boost labour mobility, support hundreds of thousands of jobs and businesses, increase transactions to boost the property industry, and continue the Government’s record of supporting people, including younger people, into home ownership. For those reasons, I commend the Bill to the House.
Question put, That the Bill be now read a Second time.
Stamp Duty Land Tax (Reduction) Bill
Tuesday 10th January 2023
(1 year, 3 months ago)
Commons ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2023 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 10 January 2023 - (10 Jan 2023)
16:20 - The Committee divided: - Ayes: 184 / Noes: 311 - Question accordingly negatived.
16:36 - The House divided: - Ayes: 14 / Noes: 310 - Question accordingly negatived.
16:50 - The House divided: - Ayes: 308 / Noes: 170 - Question accordingly agreed to.
The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move amendment 1, page 1, line 2, leave out subsection (1) and insert—
“(1) This section makes modifications of Part 4 of the Finance Act 2003 in relation to any land transaction the effective date of which falls in the period (“the temporary relief period”)—
(a) beginning with 23 September 2022, and
(b) ending with 31 March 2025.”
This amendment provides that the relief from Stamp Duty Land Tax provided for by the Bill is only to apply until 31 March 2025.
The Second Deputy Chairman of Ways and Means (Sir Roger Gale)
With this it will be convenient to discuss the following:
Amendment (a) to amendment 1, after “transaction” insert
“(except in relation to additional dwellings)”.
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).
Amendment (b) to amendment 1, leave out “31 March 2025” and insert “31 March 2028”.
This amendment is intended to extend the temporary relief from Stamp Duty Land Tax so that it expires at or around the time as the frozen thresholds for Income Tax, Inheritance Tax and National Insurance are due to expire.
Government amendments 2 and 3.
Amendment 15, page 1, line 13, leave out subsection (3).
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment (a) to Gov 1).
Government amendments 4 to 12.
Clause stand part.
Government amendment 13.
Clause 2 stand part.
New clause 1—Comparison of temporary and permanent relief—
“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the change in Government policy on stamp duty land from—
(a) the Plan for Growth published on 23 September 2022, to
(b) the Autumn Statement published on 17 November 2022.
(2) This review must include—
(a) an assessment of the costs of implementing the change in policy referred to in subsection (1) for the Government, the property industry, and homebuyers;
(b) an assessment of any wider costs and impacts of the change in policy referred to in subsection (1) on the housing market; and
(c) what measures the Government is planning to ease the impact on tax revenues, home purchases and the housing market of the reduction in stamp duty land tax coming to an abrupt end on 31 March 2025.”
This new clause would require the Government to publish a review of the change in Government policy to make the relief in this Bill temporary instead of permanent.
New clause 2—Review: first-home buyers—
“The Chancellor of the Exchequer must conduct a twice-yearly review of the impact of this Act on the number of people buying their first home and must publish a report of this review at six-month intervals.”
This new clause is to ensure that a regular report is made on the impact of the proposed Act on the number of people buying their first home.
New clause 3—Review: second homes in National Parks and Areas of Natural Beauty—
“The Chancellor of the Exchequer must publish an annual report on the impact of this Act on the number of second homes in National Parks and Areas of Natural Beauty.”
This new clause would require that an annual report is published on the impact of the Bill on the number of second or subsequent homes in National Parks and Areas of Natural Beauty.
New clause 4—Review: house prices in rural areas—
“The Chancellor of the Exchequer must publish an annual review of the impact of this Act on house prices in rural areas.”
This new clause would require that an annual review is published on the impact of the Bill on house prices in rural areas.
New clause 6—Review: availability of affordable housing and the private rented sector—
“The Chancellor of the Exchequer must conduct an assessment into, and publish a report on, the impact of this Act on the housing market, including (1) the impact on the availability of affordable housing and (2) the private rented sector.”
This new clause would require the Chancellor of the Exchequer to conduct an assessment into the impact of the Bill on the housing market, including the availability of affordable housing and the private rented sector.
New clause 7—Report on effect of temporary relief—
“(1) The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.
(2) This assessment must include an assessment of the impacts on—
(a) the volume and value of housing transactions on the housing market,
(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and
(c) tax revenues.
(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”
This new clause would require the Government to publish an assessment of the impacts of the temporary tax relief and a recommendation before the temporary relief period comes to an end.
Government amendment 14.
Victoria Atkins
It is a pleasure to serve under your chairmanship, Sir Roger.
At the autumn statement, my right hon. Friend the Chancellor set out set out how the Government are dealing with the global economic challenges that we face. The consequences of Putin’s illegal invasion of Ukraine and the covid-19 pandemic mean that we must be fiscally responsible while supporting the economy and encouraging our businesses to grow and our constituents to thrive. We need a balanced approach to support our objectives, which includes helping people get on to and move up the housing ladder—and indeed to downsize.
Victoria Atkins
It is very soon, but because it is my right hon. Friend, I will certainly give way.
Sir Desmond Swayne
My hon. Friend is most generous and kind. Those of us who voted with enthusiasm for the Bill’s Second Reading on the grounds that there was to be a permanent change for the benefit of those people wanting to get on to the housing ladder are somewhat discomfited by the fact that Government amendment 1 will make it merely a temporary measure to assist those who want to do so. We want them to be permanently assisted. Can she reassure me?
Victoria Atkins
I very much understand why my right hon. Friend raises that point. I know he took a great interest in the autumn statement and listened carefully to the submissions and oration of the Chancellor of the Exchequer, my right hon. Friend the Member for South West Surrey (Jeremy Hunt). We had to take some difficult decisions in the course of the autumn statement to ensure that our approach to the economy is fiscally responsible. This is one way in which we hope to stimulate the housing market in the next two years in the difficult economic circumstances we find, but thereafter we are confident that the economy will improve and we will be able to return to the status quo as it was before 23 September. However, the broader picture about reducing the taxation burden on our constituents still stands. Indeed, I hope my right hon. Friend listened with great interest to the Prime Minister’s speech last week in which he made it clear that that is our ultimate goal.
Sir Christopher Chope (Christchurch) (Con)
On 17 October, the new Chancellor of the Exchequer told this House that this particular element of the mini-Budget relating to stamp duty land tax would be retained. It was on that basis that the Bill was introduced in the House. It was only a month later that we had the autumn statement when the Chancellor of the Exchequer went back on what had been said earlier.
Victoria Atkins
Again, my hon. Friend puts his finger on the point as to the very, very fast-moving economic conditions we have faced in the last few months. He will recall the autumn statement and the great detail the Chancellor went into in terms of ensuring that our approach is fiscally responsible. We had to acknowledge and react to the conditions as we found them then. We are confident that the sunset clause in the Bill will enable us to support our constituents. Indeed, it is happening at this very moment in time, because, of course, we brought in the measures as soon as possible immediately after the original announcement. They are helping, for example, first-time buyers get on to the housing ladder.
Victoria Atkins
I will take one more intervention, and then make a little progress.
Barry Gardiner
I am very grateful to the Minister. I listened carefully to what she was saying about global economic circumstances, in particular Russia’s invasion of Ukraine and the effect that that has had on people in this country through their energy bills. She will know that the Government set a target for a 78% reduction in greenhouse gas emissions by 2035. To achieve that, will she consider looking at whether stamp duty might be raised up or put down in accordance with the energy performance certificate ratings of properties, perhaps providing a way for households to benefit financially but ensure that they meet the Government’s target?
Victoria Atkins
That is an interesting suggestion. At first blush, my mind goes immediately to the complexity of such a scheme, particularly given our proudly antique housing stock—certainly in my constituency, with beautiful farmhouses and market town high streets that are many, many hundreds of years old. I therefore think it unlikely—I will be honest with the hon. Gentleman—but he is always welcome to write to me. I will make this point: the Government’s very real progress over the last decade, on drastically cutting our carbon emissions, with the help of industry, homeowners and members of the public, should be acknowledged. Dare I say it, if it is not unparalleled across the world, we are certainly in the top few. What is more, we have tried, through measures such as VAT zero rating on energy-saving materials, to encourage homeowners and others to plug gaps and make their homes more energy efficient. So, I do not think stamp duty is the way to help, but certainly the Government have already put in place measures to try to help us meet our very, very ambitious climate targets.
The last few years have, frankly, been tough on us all and we want to help people take that next step in their lives to buy a new home. The Bill cuts stamp duty land tax for first-time buyers and other homeowners to reduce the upfront cost of moving home. It is because we want to help people as quickly as possible that the rates are already in force, helping our constituents.
The provisions in the Bill apply only to purchases of residential property in England and Northern Ireland, as land transaction taxes have been devolved to Scotland and Wales.
Tim Farron (Westmorland and Lonsdale) (LD)
Sir Roger, it is a pleasure to serve under your chairmanship.
The Government’s proposal in the Bill will do some marginal good, reducing the cost of buying for some people. The danger is that it meets the needs of a very small number of people. The overwhelming majority of people living in my constituency who cannot afford a home are not in the waiting room, shall we say, to be able to access a new home on the basis of this change. If we think, for example, that £250,000 constitutes the price of an affordable home, we are not in touch with reality—certainly not in the Lake district and the rest of Cumbria. I do not propose to vote against the Government’s proposal, because I can see how it could do some good at the margins, but if we were really bothered about the fact that most people cannot afford to be a first-time buyer with a home of their own, we would be tackling the lack of development of new council homes, social rented homes across the board and shared ownership, and we would be looking at making better use of the current stock.
The reality is that whatever benefit the stamp duty cut might have brought to families has already been quashed and exceeded by the additional cost they will have to bear through mortgage interest rate increases resulting from the Government’s failures. I am told that in the financial markets, those who are in the know refer to the increased mortgage costs, which dwarf any benefit that the stamp duty may bring to new homeowners, as the moron premium—I promise you that those are not my words, Sir Roger. That is the consequence of a very foolish decision that this Government made just a few months ago.
That is not to say that there is no benefit in what the Government are choosing to do. However, my new clause 3, which—with your permission, Sir Roger—I shall move today, would give the Government the opportunity to recognise that there are unintended consequences. We know that because they have already happened. We all remember that in July 2020, when the current Prime Minister was Chancellor of the Exchequer, there was a stamp duty holiday for purchasers of properties of a value of up to £500,000. The impact on the Lake district was instant and catastrophic: 80% of all new house sales in our community were in the second home market. Some 84% of properties in Elterwater, and more than 50% of properties in Coniston, are not lived in. Communities that were already on the margins might have lost enough full-time occupants that they cannot sustain a local school, post office or bus route or have any community life whatever.
There have also been consequences for our workforce. We are all rightly focused on the impact of the massive pressures on our health and social care services; in the lakes, they are under even more pressure because the homes that care workers and health workers once lived in are no longer available to them. That possibility has been wiped out, partly because of a well-intended but poorly informed decision that the current Prime Minister made as Chancellor in July 2020. We have learned that lesson, so there is no excuse for the Government to act without thinking about the unintended consequences and making some attempt to mitigate them.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
I agree fully about areas of high housing pressure where people in local communities cannot buy their own home. May I commend to the hon. Gentleman what we have done in Wales? The Welsh Government have brought in a land transaction tax to replace stamp duty, which is a devolved matter, as the Minister said. Under that system, anybody who buys a second or third home pays a premium on that tax, which comes out of the first property as a disincentive to buying more than one home. Furthermore, in areas of high housing pressure, local councils can choose to treble council tax; indeed, my county council, Carmarthenshire, has announced that it will double council tax on second homes.
Tim Farron
Yes. Most of our good ideas were somebody else’s first, so there is no harm whatever in looking at what devolved Administrations such as the Welsh Senedd Government have done. There are positives there from which we could learn, but it is also good to learn from our own mistakes—and the Government made a well-intentioned mistake two and a half years ago, with a very damaging impact on the lakes, on many other rural parts of England and across the United Kingdom.
Let me ram home what that means. It robs us of the life of our communities and the services on which we rely, but it also robs us of a workforce. That means fewer people working not only in social care or health, but in our hospitality and tourism industry. The lakes are the second biggest visitor destination in the country, with 20 million visitors a year, but with a very small population. The workforce that services all the folks here and the many others who holiday in the lakes have nowhere to live any more. We are in the terrible situation of facing a recession nationally but, bizarrely, having more tourist demand in the lakes than we can meet. We cannot meet that demand because we do not have the workforce, and one reason is that the Government have been negligent in providing and ensuring enough affordable homes for people in our communities.
I support the Opposition amendments that would ensure that the stamp duty cut is not available for the purposes of buying a second home; I think that is wise. My new clause 3 would place a responsibility on the Secretary of State to look every year at the policy’s impact on the number of second homes bought, not just in communities like mine but across the country.
The Government know what is happening. The evidence is before their eyes: their temporary stamp duty cut in 2020, a well-intentioned attempt to boost the economy at the beginning of the pandemic, had the immediately negative consequence of hollowing out communities in my area in Cumbria and in Northumberland, the west country and other parts of the UK. I am not theorising; it has already happened. My communities were badly hit by a well-intentioned but foolish Government policy. Why would the Government not accept new clause 3, which would allow them to do something about a policy that is positive on the whole, but that they know has a negative consequence on communities such as mine?
We will not vote against the Bill. We recognise that it does some good, although we think it is a bad use of public money. We could do so much more with that money by investing it in affordable homes for local families, ensuring more council homes and making sure that we tackle inequalities in rural communities in particular. We reckon that there is a marginal benefit from the Government’s policy, but there is a disbenefit for communities such as mine. Will the Minister take new clause 3 on board and agree simply to review the situation year on year, to prevent communities such as mine in the lakes, the dales and the rest of Cumbria from being hollowed out? Otherwise, they will be turned into ghost towns, their workforces will be eradicated and no young people will be able to set up a home there—all because of a decision with an unintended consequence of which the Government cannot now claim to be unaware.
Several hon. Members rose—
The Second Deputy Chairman of Ways and Means (Sir Roger Gale)
Order. The shadow Minister may be slightly perplexed as to why I did not call her first, but the hon. Member for Westmorland and Lonsdale (Tim Farron) had indicated to me that he wished to press new clause 3 to a Division, so I thought it might be helpful for her to hear his arguments before being called to speak.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Thank you, Sir Roger. It is a pleasure to serve under your chairship this afternoon. I was not perplexed at all.
When we debated the Bill on Second Reading in October, the stamp duty cut that it seeks to introduce was one of the last few measures to have survived from the Tories’ reckless mini-Budget in September. As we said at the time, we oppose the stamp duty cut because it would not be the right way to spend public money and would not be responsible. On the back of 13 years of economic stagnation, our economy has just suffered long-term damage from the Tories’ recklessness at the end of last year. We made it clear that spending £1.7 billion a year on the proposed stamp duty cut simply could not be justified.
In October, as hon. Members may remember, there was a last-minute flip-flop in parliamentary business. Four days before we were due to debate all stages of the Bill, the Leader of the House announced that we would debate only its Second Reading. No reason was given for that last-minute change to parliamentary business, so we speculated that the decision might have been intended to give the new Prime Minister and his Chancellor the chance to change their mind about these stamp duty changes. That is indeed what has happened.
Rather than reversing the stamp duty cut altogether, however, the Government’s amendments seek only to impose a time limit on it. Ministers could have used the breathing space since last October to do the right thing and scrap the stamp duty cut, but instead the Chancellor proposes only a partial U-turn. Government amendment 1 will amend clause 1, imposing a sunset date of 31 March 2025. The Government’s other amendments, which are consequential on that change, include an amendment to the name of the Bill.
The Opposition remain opposed to the stamp duty cut. Even if Government amendments 1 to 14 are agreed to, the Bill will still represent a failure by the Conservatives to spend money wisely.
We are not talking about a small amount of money: the Government’s own figures make the Bill’s price tag clear. Even if the stamp duty cut is time-limited, it will still cost taxpayers £3.2 billion. We are serious about spending public money wisely, and the Government should be as well. For that reason we will vote against the Bill on Third Reading even if it has been amended, but before we reach that stage we still want to use this Committee stage to interrogate the Government on some of the detail, and to urge them at least to amend its provisions if they are not willing to drop it entirely.
Sir Christopher Chope
The hon. Lady seems to be obsessed with the issue of second homes. What about the point she made earlier about the number of young people becoming home owners, which has declined so dramatically since 1987? In 1989, 51% of 25 to 34-year-olds owned a home; now about half that number do so. What are the Opposition going to do about it?
Abena Oppong-Asare
In fact, the statistics quoted by the hon. Member show that the Bill will not help people. It will not help first-time buyers, and it is not just Labour Members who are saying that: the Resolution Foundation has provided statistical evidence that it will not help them. We want to help first-time buyers as well, but this is not the right solution. It will be mainly second and additional homes that benefit. Our two amendments would amend Government amendment 1 to remove the relief for buyers of additional dwellings, and would remove clause 1 (3), which raises the threshold for them. They would prevent the Bill from giving relief from stamp duty to buyers of second homes. I hope the hon. Member will support our proposals, particularly our amendment to enable first-time buyers to get on to the ladder as he wishes them to do.
As I have made clear, we do not believe that this stamp duty cut is the right or responsible way in which to spend £3.2 billion of public money, but if the Government are not willing to cancel the cut altogether, I urge Conservative Members at the very least to support our amendment to prevent second home buyers from receiving a £2,500 tax cut.
New clause 1, which Labour has also tabled, requires the Chancellor to be up front and transparent about the costs of the partial U-turn on the stamp duty cut, and to set out the measures that the Government will take to mitigate the impact of the abrupt end of the stamp duty relief at the end of March 2025. We know from the Government’s policy paper on this tax change that His Majesty’s Revenue and Customs will have to incur costs in the region of £300,000 to change IT systems, and about £2.4 million in extra staff costs. That is ridiculous. Through new clause 1, we aim to push Ministers further by asking them to set out specifically the costs of implementing their U-turn
“for the Government, the property industry, and homebuyers”,
as well as
“any wider costs and impacts of the change…on the housing market”.
We are also asking them to set out the measures they are
“planning to ease the impact on tax revenues, home purchases and the housing market of the reduction in stamp duty…coming to an abrupt end on 31 March 2025.”
We know from Government amendment 12 that Ministers are introducing measures to ensure that transitions that straddle the end of the temporary relief benefit from the reduction, but the question of the impact of ending the stamp duty relief goes much further than that. In 2016, the Office for Budget Responsibility published a paper on property tax changes and forestalling when transactions are brought forward to benefit from lower tax rates. The OBR found that in each historic case that was analysed, the preannouncement of an upcoming tax increase led to a sizeable forestalling. Forestalling is therefore expected to be an important issue in relation to the end of the temporary stamp duty cut, and we urge the Government to set out the measures they are planning ahead of that. If they are not willing to accept our new clause 1, I urge the Minister to set out the detail that we request, either at the end of the debate or subsequently in writing.
When our country is suffering the consequences of 13 years of low growth and of the Conservatives’ economic chaos at the end of last year, now is not the time to be spending £3.2 billion on this tax cut, particularly when hundreds of millions of pounds will go to the buyers of second homes. We urge Members in all parts of the Committee to support our amendments to remove the tax cut for second-home buyers, and to join us in opposing the Bill on Third Reading.
Craig Mackinlay (South Thanet) (Con)
I think that the Government have made a number of admissions today about the importance of property taxes, and stamp duty land tax in particular. During the covid period we used a reduction to try to stimulate the market and keep it afloat, for good reasons. I heard what was said by the hon. Member for Westmorland and Lonsdale (Tim Farron). There are often flipsides, downsides and unintended consequences from tax changes, but the implicit admission from the Minister was that lower stamp duty encourages market transactions. In my mind that has to be a good thing, because property sales refresh housing stock. I imagine that the first thing any of us who are lucky enough to own a property will do when we purchase it is to do stuff. We might improve the bathrooms—or whatever we fancy, if pockets are deep enough—but those transactions that we make with local builders and others add to the local market. They add jobs, and there are VAT revenues and profits for B&Q and elsewhere. This all comes with it.
A trap that the Liberal Democrats and the Opposition Front Bench fall into is that they do not see tax as a game of chess. Too often we—the Treasury included—see tax as a one-step move: if we do this, it will create just that. It is far more complicated than that, because there are other outcomes in terms of economic activity that are not always recognised. But the strict admission by the Government Front Bench today is that lower stamp duty makes the wheels turn, and that has to be to the good.
We are currently seeing a modest reduction in house prices, so this type of measure to reduce stamp duty is very much to be welcomed, but I have a rather more long-standing objection to SDLT and to this form of capital tax generally, but most particularly to SDLT, because it stops labour mobility. If one of my constituents, someone with a family, were offered a job elsewhere in the country, the most natural thing would be to sell their property and move to that new area. But when they are faced with a stiff bill for SDLT, they have to be doubly or triply sure that this is the right move, because it is likely to cost tens of thousands of pounds. It worries me that people are not taking up roles elsewhere because they need to be absolutely sure. What probably happens is that they take a rental property elsewhere to get a feel for the area and find out whether the job is right. That is not helpful for their family life in the longer term.
The Government Front-Bench team made another admission this afternoon. Not surprisingly, the Minister announced with great fanfare the very good news that in vast areas of the country, the majority of transactions will fall outside of stamp duty. That is particularly true for those buying a property for the first time. We often talk about tax, and people’s idea of fairness will probably be different depending on where they sit in this House, but can it really be fair that a constituent in South Thanet who is trying to purchase a modest property will face this SDLT charge just because they are in Kent in the south-east, whereas someone buying the self-same kind of property in another part of the country will not pay that tax at all? I am not entirely sure of the fairness of that. I would rather that everyone paid a similar amount in a property transaction, possibly based on the size of the property.
Another area that I have discussed with many colleagues over the years, including at a few roundtables, is retirement mobility. Too often, people who have lost their partner, a husband or wife, are stuck in their old property. We are very much aware of the cost of heating that type of property. They do not have the ability to do more work to increase their annual income, and they are stuck in a property that is too big for them, with all those memories of old. They realise that they really ought to move somewhere smaller that is more energy efficient and closer to services. However, if they live in an area of the country that is expensive, they might find an ideal property that is smaller and has all those good things, but there will be a very big SDLT charge.
I know the thoughts of older people, because I have had these discussions with my father and friends, and when they look at the potential bill just for doing the right thing through retirement mobility, they often say, “Do you know what, I’m not prepared to pay it. I’m just not going to pay £10,000 or £20,000 or whatever the price may be to do the right thing.” They do not want to pay that much to move somewhere more appropriate for older living.
I implore the Minister to receive a document from me and to have a conversation about the concept of a downsizing relief for older people. It could be fixed to retirement age, when people’s ability to earn has gone because they have retired. Perhaps they could get some credit, such as free stamp duty, for doing the right thing in moving to a smaller home, which is sensible for them, the family and everyone else. In so doing, they would be releasing those bigger homes for the families who need them.
Helen Morgan (North Shropshire) (LD)
I rise to speak to new clauses 4 and 6, which I tabled, and to support new clauses 2 and 3, which were tabled by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron).
The housing crisis has been discussed at length today and at many other times in this place, and Members are well aware of the pressure that second and luxury home ownership is placing on communities where existing residents are struggling to buy their first home. In rural parts of Britain, including North Shropshire, our villages are at risk of turning into retirement villages and our tourist hotspots are almost becoming ghost towns at certain times of the year. That is having a hugely negative impact on rural skills and the rural economy, as both pupils and people of working age are in increasingly short supply.
The economic climate has changed, but house prices in rural Britain have risen fast in recent years. Figures from Hamptons, the estate agent, reveal that rural house prices rose by 14.2% in 2021, compared with just 6.8% in urban areas. The property website Property Road estimates that there are 132,000 fewer young homeowners in rural England than in 2010. I do not want to bore the Committee with facts and figures, but eight in 10 respondents to a Country Land and Business Association survey said that the lack of affordable housing had priced out first-time buyers in rural areas.
Although efforts to help first-time buyers in all areas of the country are welcome, the experience of the previous temporary stamp duty reduction in 2020 suggests that there is a risk of distorting the market and achieving the opposite. During that period, rural areas saw soaring house prices, with those trying to sell in Shropshire reporting intense competition and competitive bidding, unseen, for their home. That is all very well for those who were trying to sell, but it was bad news for anyone trying to buy a home at the same time and disastrous for anyone trying to get a foothold on the housing ladder.
Meanwhile, genuinely affordable housing—housing costing less than £250,000—remains in desperately short supply. Market prices have risen so much in recent years that it is putting intense pressure on social housing and the private rented sector, with social housing waiting lists spiralling and thousands of families being forced into temporary bed-and-breakfast accommodation. We all know this is far from ideal for anyone who needs a place to call home, but it is totally unsuitable for families whose children need the security of a stable school and home environment. People who came here under the Ukrainian and Afghan refugee schemes, and whose family sponsorship has come to an end, are now the responsibility of their local authority, and they are also being forced to spend time in unsuitable temporary accommodation.
The potential for an accidental house price distortion makes it much harder for local authorities and housing associations to replace stock sold under the right to buy, because they are unable to retain 100% of the proceeds. I tabled new clause 6 to require the Treasury to consider the impact of these measures on the housing market, and specifically on the availability of private rented and affordable housing, because people who are priced out of those sectors are adding to the ever-increasing waiting lists for social housing.
New clause 4 would require specific consideration of the housing market in rural areas in response to the recent trend of house price growth in these areas outpacing the house price growth in urban areas, which is exacerbating the issues we have seen across the country. We simply cannot ignore the housing crisis any longer. All policy should consider the possibility of unintended consequences and mitigate that risk. These reports would better inform policy, and I urge the Minister to consider their inclusion so that we do not cause an unintended problem.
I briefly turn to second homes, although I cannot improve on the points made by my hon. Friend the Member for Westmorland and Lonsdale. Suffice it to say that second home ownership is hollowing out villages in some parts of the country on weekdays and during the winter, and it is driving up house prices for everyone, meaning that many people cannot afford a first home. In a country with a housing shortage, the Government should strongly discourage empty second homes. The hon. Member for South Thanet (Craig Mackinlay) made an excellent point on that issue.
I support new clauses 2 and 3, which would require the Chancellor to consider the impact of the Bill on the number of first and second home buyers, such that it can be amended if necessary, and specifically to consider the worst-affected areas, which are our national parks and areas of outstanding natural beauty.
I broadly support any measure that encourages home ownership, but I fear that this temporary cut in duty, at a time when the Treasury can ill afford it, will be counterproductive for first-time buyers, particularly in rural Britain. New clauses 4 and 6 would allow the impacts to be fully understood, to confirm whether I am right and to make sure the policy is well informed.
Sir Christopher Chope
Happy new year, Sir Roger.
In speaking to my amendment (b) to amendment 1 and my new clause 7, I share with the Committee my dismay at the way in which the Government, with their amendments, are transforming this Bill, which originally introduced a permanent tax reduction. The Bill will now increase tax permanently by about £1 billion a year from April 2025.
On 17 October, the new Chancellor confirmed that the mini-Budget’s provisions on stamp duty land tax were safe, yet in his autumn statement, one month later, he announced:
“I will sunset the measure”.—[Official Report, 17 November 2022; Vol. 722, c. 846.]
That is an extraordinary use of language, because it does not fit the definition of a sunset clause set out on the UK Parliament website:
“A provision in a Bill that gives it an expiry date once it is passed into law. Sunset clauses are included in legislation when it is felt that Parliament should have the chance to decide on its merits again after a fixed period.”
I assumed, wrongly, that by introducing a sunset clause, the Government would give this House an opportunity to reconsider the situation before the advent of that sunset period.
That is why I tabled new clause 7, which states:
“The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.”
That would meet the concerns raised by the hon. Members for Westmorland and Lonsdale (Tim Farron) and for North Shropshire (Helen Morgan). New clause 7 continues:
“(2) This assessment must include an assessment of the impacts on—
(a) the volume and value of housing transactions on the housing market,
(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and
(c) tax revenues.
(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”New clause 7 would be a proper sunset provision that enables this House to return to the issue before the change is made permanent, but the Government amendments do not embrace that at all.
How does this Bill fit with what the Prime Minister said on 4 January? In quite a long speech, his only reference to taxation was:
“as soon as we can, the Government will reduce the burden of taxation on working people.”
Today, six days after that speech, the Government are asking us to increase the burden of tax on working people with effect from April 2025.
We have also heard in the interim that the Government will forgo the receipt of about £1 billion from the sale of Channel 4, yet as recently as 18 July 2022, when responding to the consultation on that issue, the Government announced that now is the right time to pursue a change in ownership of Channel 4. Why, one might ask, is now the right time both to increase taxes and to abandon asset sales?
Stamp duty land tax is targeted at homeowners and those who aspire to home ownership. Like my hon. Friend the Member for South Thanet (Craig Mackinlay), I am opposed to stamp duty land tax because it is arbitrary, clunky and unfair in how it applies in different parts of our country.
For example, if someone lives in Christchurch and the average price of a house is £405,000, that does not mean that they are better off. It means they have to spend more money on the borrowing costs in order to buy an average house for themselves and their family. Someone living in the Minister’s constituency, where the average house price is only £200,000, would have lower borrowing costs and would not have to pay any stamp duty land tax.
Victoria Atkins
This is precisely why the Government are so committed to levelling up. Although I know how beautiful my hon. Friend’s constituency is, having had the pleasure of visiting it, in my beautiful corner of England, we do not, sadly, have the transport links that other constituencies have. It is precisely this drive for levelling up, which I know Conservative Members are united on, which may help with some of the issues he sets out so eloquently.
Sir Christopher Chope
I am grateful to the Minister for that intervention. It comes down to how we define, “levelling up”. The point I am trying to make is that, if somebody is buying an average house in Christchurch, or in her constituency of Louth and Horncastle, it should not make any difference in terms of taxation whether the house is going to cost £405,000 or £200,000. Why should the person buying a house in Christchurch who wants to become a teacher or an NHS employee in the area not only have the burden of having the higher house price—she has referred to some of those issues—but have to pay £10,000 in SDLT for the privilege of moving into the Christchurch constituency to purchase an average-priced house? I do not see any justice in that at all. In levelling up, we should be putting those two categories of person on the same level when it comes to their liability for paying transaction taxes.
My hon. Friend the Member for South Thanet made the suggestion, which I have also made, that we should scrap SDLT. If we want to have a transaction tax, we should introduce one based on, for example, the size of a property, because that would be neutral; it would really be levelling up across the country. Obviously, it would be more popular with some people than with others, but it would certainly be very popular with my constituents and it would meet the criterion of levelling up.
Mr Peter Bone (Wellingborough) (Con)
It might be very popular in Christchurch, but it would be very unpopular in Wellingborough and it seems totally unfair to me.
Sir Christopher Chope
This is the challenge, because some people think that this would adversely affect them. When we were looking at whether we should change the domestic rating system, we always faced the problem of the people who were going to be worse off, who were always the losers and who were going to complain. I accept that, were this to be implemented in the way I am canvassing, it would create some losers who would be unpleasantly surprised. That leads me to my belief that SDLT and stamp duty should be abolished altogether. [Hon. Members: “Hear, hear.”] That is an issue on which we, as real Conservatives who believe in a homeowning democracy, should be able to agree—and it seems from that response that we can agree on it—rather than dividing again in trying to find an alternative to an already unsatisfactory tax.
Let us remind ourselves that, in the 1980s, when we had the beginnings of the property-owning democracy revolution, with more than 50% of people in the 25 to 34 age group being homeowners, we had a stamp duty regime where the maximum rate to purchase any house was 1%. Since this process started under the Blair Government and continued with the coalition—the Treasury is always seeing this as a cow to be milked for taxpayers’ benefit—the proportion of people able to afford to buy their homes has declined significantly. So the challenge I make to the Government, and I hope the Minister can respond to this, is: if we put stamp duty back to 1% as a maximum, what would that do to increase the number of transactions in the housing market, which, as others have said, is ostensibly the Government’s agenda?
On 23 September, HMRC’s policy paper “Stamp Duty Land Tax Reduction” set out the following policy objective:
“This measure is part of government’s commitment to support homeownership and promote mobility in the housing market, in turn supporting economic growth. Increased property transactions also add to residential investment and spending on durable goods.”
Unfortunately, that was withdrawn on 28 November. It would be interesting to know whether that policy objective has been retained by the Government even though the HMRC policy paper has been withdrawn. Another paper issued on 23 September was “The Growth Plan 2022”, which I thought was great, as did many of my constituents. Paragraph 3.30 of the plan stated that the changes to SDLT would
“take 200,000 homebuyers, including 60,000 first-time buyers, out of SDLT entirely.”
Today, however, we are discussing a proposal by the Government, by way of amendments to the Bill, that would put those 200,000 home buyers, 60,000 of them first-time buyers, back into SDLT. Do we really want to do that? Do we really think it will help to move the housing market, boost growth and help people to have the mobility to get to new jobs?
This is not just about people being able to move to a new job by moving house; we also need to think about the damage to the environment being done by the large number of people who are now, having no alternative, being forced to engage in long-distance commuting. Last week, I visited a school in my constituency. The teacher showing me around has been driving regularly from Wales to do a great teaching job in the Christchurch constituency. Fortunately, she is about to move into the constituency, but that is after many, many months of that long-distance commuting. That is highly undesirable. It is bad for the environment and bad for the people involved, because it means that they are sitting behind the wheel of a car for far too long during the working week.
Stamp duty land tax is targeted against homeowners and it will have an adverse effect on labour mobility. Yet the Prime Minister, in his speech on 4 January, was complaining—I agree with him on this—that a quarter of our country’s labour force is inactive and, in this Bill, he is introducing an additional tax on the very mobility that he should be espousing. As my hon. Friend the Member for South Thanet has said, SDLT is a tax on downsizing: it makes it much more difficult for anyone to receive a significant return by selling a larger house and purchasing a smaller one.
My biggest complaint, though, is that the provision hits hardest those for whom homeownership is least affordable. The latest figures, produced by the House of Commons Library in December, show that, in Christchurch, the average house price is now 11.8 times earnings. The national average in England and Wales of eight times is bad enough, but why are we imposing that extra burden on those buying houses in places such as Christchurch? The latest figures from the 2021 census show that the dream of a homeowning democracy espoused by generations of Conservative politicians since Margaret Thatcher, and first raised in 1975, is not one of this Government’s priorities.
Sir Christopher Chope
I think it is very sad and embarrassing that His Majesty’s loyal Opposition should be crowing at that statement.
Mr Perkins
Just to clarify, I am not remotely crowing. I entirely agree with the hon. Gentleman. This Government have hugely failed on allowing people to buy their own homes. It is a national disgrace. I support what he is saying; I am not remotely crowing.
Sir Christopher Chope
I accept that I used the wrong expression in suggesting that the hon. Gentleman was crowing. But may I set out the basis on which I have these concerns? In the Prime Minister’s speech on 4 January, there was not one mention of the word “housing”, let alone any mention of the expression “home ownership”. Why is that? We obviously have a real crisis in housing and home ownership on our hands. We are facing a potential fall in house prices this year—predicted by Oxford Economics to be about 12%, but who knows? Having stamp duty land tax, even at temporarily reduced levels, will mean that the burden of the reduction in house prices will be borne by those people trying to sell to a greater extent than would otherwise be necessary, because potential purchasers will have to budget for making SDLT payments to the Government.
You can tell, Mr Evans, that I am very concerned about the Bill. When I see that the Prime Minister has declared that the people’s priorities are the Government’s priorities and that we will rebuild trust in politics through action, all I can say is that I do not believe that the new measures in the Bill accord with the people’s priorities because I think those priorities are for a permanent reduction in stamp duty land tax and even, potentially, the abolition of that tax, rather than reintroducing it at a higher level in 2025.
When I was talking earlier today to a member of the Government’s Treasury team, I was told that one reason why my amendment (b) could not be accepted by the Government was that it had not been cleared by the Office for Budget Responsibility. I ask rhetorically, “Who is in charge?” Are we really saying that the Office for Budget Responsibility is able to forecast things to the extent of £1 billion here or £1 billion there? I do not think it can, and if that is the best that the Government can do in arguing against amendment (b), I hope they will think again about whether to accept it.
Selaine Saxby (North Devon) (Con)
When this Bill was previously before the House, on 24 October last year—indeed, on the day we last changed Prime Minister, so it was under a different Treasury Minister—I asked the Treasury to analyse the potential harms caused by excessive second home ownership and holiday lets. I thank the Minister for her ongoing engagement on this issue, as well as the rest of the Treasury team. I have spoken to them on numerous occasions about the many complex taxation issues causing an imbalance in our housing market in constituencies such as mine, which I hope we can take steps to address in the coming months.
We know that when stamp duty was last reduced post pandemic, it generated a surge in short-term holiday lets and second home purchases. Indeed, 25% of purchases in my North Devon constituency during that period attracted the higher rate of stamp duty as an additional dwelling. However, we have no information on what proportion might have been long-term buy-to-let landlords. Alongside the many challenges in our North Devon housing market, we have seen a 67% decline in private rentals, with a surge in section 21s enabling landlords to take advantage of the tax inequalities between long and short-term rentals.
We desperately need to find a way to encourage buy-to-let landlords. The complexity of paying the 3% levy for an additional dwelling is, in many ways, a distraction from a Bill designed to help first-time buyers in particular on to the housing ladder. The removal of stamp duty saves thousands for anyone buying their first home—up to £425,000 at this time. When the numbers are fully analysed, in this legislation the maximum benefit to somebody buying an additional dwelling is just £2,500. We need to be just a bit realistic about whether that will be a large enough sum to motivate a change in behaviour in people who are buying additional properties—their second, third or fourth home.
For more than two years now, I have stood up in this House and asked for steps to be taken to tackle the housing crisis in North Devon. The Levelling-up and Regeneration Bill has now been amended to reflect the concerns of constituencies such as mine. Indeed, it is good to see Conservative-run councils in Devon and Cornwall taking steps to adopt measures in that Bill to double council tax on second homeowners. It is disappointing that Lib Dem-run North Devon Council has not taken such steps, but I remain optimistic that it will.
I very much hope that the paper I have submitted to the Treasury on behalf of Conservative colleagues—it includes many suggested changes to the tax system to tackle the imbalances between long and short-term rentals, and to continue making it easier for local families to buy and rent in places where they grew up or where there are huge numbers of job vacancies for them—will pave the way to looking more closely into the matter. I hope that the Treasury team’s door will remain open to MPs to meet and tackle this issue.
Victoria Atkins
May I place on the record my personal appreciation of the intensive work that my hon. Friend has put into this issue on behalf of her constituents and the wider south-west? Many south-western MPs are concerned about this issue, including—dare I say it—hon. Members from the Whips Office, who cannot stand up and speak. I am extremely alive to the issues that she raises. I wonder whether she would do me the favour of coming to see me at the Treasury over the coming months so that we can discuss further the issues in her constituency and the interesting ideas she has put forward.
Selaine Saxby
Nothing would give me more pleasure than to go back and speak with the Minister about these matters. We all worry about why the NHS is struggling to recruit. I can quite definitively tell people here today that the public sector struggles to recruit in North Devon because of the housing crisis.
We on the Conservative Benches are keen to tackle this issue. Yesterday’s cross-party drop-in session was hugely helpful. We heard from the officials behind the legislation, as well as from the Minister. It is just a shame that Opposition Members did not turn up—not one of them. They have tabled a number of amendments to the Bill, but do we really need to put reviews into legislation? One cannot help but wonder whether such amendments are politically motivated rather than aimed at delivering real change to constituencies that urgently need their housing markets to be rebalanced.
Anthony Browne (South Cambridgeshire) (Con)
It is an honour and a delight to follow my hon. Friends the Members for North Devon (Selaine Saxby) and for Christchurch (Sir Christopher Chope). May I say at the outset that I completely agree with my hon. Friend the Member for Christchurch that you should be Sir Nigel, Mr Evans? If I call you Sir Nigel, will I have as much time to speak as my hon. Friend?
It is a pleasure to speak because, as the chair of the Back-Bench Treasury committee, I have done a lot of work on stamp duty policy, and I have had a slightly perverse interest in stamp duty for the last decade or so and written various policy papers and research reports on it. We all support raising the level of home ownership. In fact, rates of home ownership started to decline under the previous Labour Government. There is a home ownership gap of about 5 million people who want to own their own home but cannot. I will support all measures—well, pretty much all measures—to increase home ownership. Clearly, we are teetering on the brink of recession and need to promote economic growth, so I very strongly support the broad thrust of the Bill in cutting stamp duty to help people get on to and up the property ladder and to stimulate economic growth. I have some reservations about the proposal being temporary and about it applying to second properties.
I will address some of the key themes of stamp duty policy. We have heard various calls today—not least from my hon. Friend the Member for Christchurch—to abolish stamp duty outright, and in fact, I have called for that before. But it is not just Conservative MPs who think that stamp duty should be abolished outright; the Institute for Fiscal Studies, on whose advisory council I sit, talked in its magisterial work on taxation policy—the Mirrlees review—about all the damage of stamp duty and called for it to be abolished.
Lord Macpherson, a former permanent secretary at the Treasury, gave evidence fairly recently to the Treasury Committee, on which I sit, about tax policy. He highlighted all the damage that stamp duty did to the economy, for many of the reasons that my hon. Friends the Members for Christchurch and for South Thanet (Craig Mackinlay) set out earlier. Lord Macpherson certainly would not be sad to see its demise.
I want to raise a slightly more nuanced point than the outright abolition of stamp duty, which would lead to a big problem with revenue, as it raised £14 billion last year in total—about £4 billion for commercial property and £10 billion for residential. That would be a hole. My more nuanced argument is that people buying houses to live in are overtaxed, but people buying properties either as second homes or for investment are undertaxed. Exactly 10 years ago, in 2013, I wrote a paper arguing for a higher rate of stamp duty for people who are buying homes not to live in. Fundamentally, homes are for living in. Two years later, the Government introduced that policy. It is now the additional premium. I do not think the Government introduced it in the right way and there are all sorts of problems with it, but I will not go into detail on that now. The stamp duty regime at least recognises the difference between people buying properties for investment or as second homes as opposed to people buying properties to live in as their homes. That tilts the property market in favour of those buying homes to live in, which is welcome.
Tim Farron
I apologise for intervening on the hon. Gentleman in his good, interesting speech. He said that it is possible for stamp duty purposes to distinguish between a second home and a first home. That means it would clearly be possible to distinguish between second homes and first homes for planning purposes, which would give local authorities the power to ensure that they protect a minimum number of homes for local families. I gave the Government the opportunity just before Christmas to vote for an amendment to do that—why does he think they did not do so?
Anthony Browne
I thank the hon. Member for that intervention. I must admit I do not know the reasons behind that, but it clearly is possible, at least from a taxation point of view, to distinguish between homes for investment and homes for living in. From a planning point of view, there are probably other considerations.
Anthony Browne
There may be many reasons.
The capital gains tax regime already distinguishes between homes for investment purposes and homes for living in. People do not pay capital gains tax on the home they live in, but if they do not live in it, they do pay. The reason that people buying homes are overtaxed has been laid out by many colleagues, so I will not overlay that, but clearly we need labour mobility and for people to be able to live in appropriate housing. If we overtax housing, we end up with lots of people living in inappropriate houses, not least the home hoarders at the end of their working lives and the empty nesters whose kids have gone and who live in too big a house and do not want to move. That has a damaging impact on labour mobility, as people want to move around the country. It is the most economically damaging tax.
The reason I say that people buying second homes for whatever purpose or homes for investment are undertaxed is that stamp duty is a transaction tax. All other transaction taxes—we can argue about whether VAT or excise duty on petrol are transaction taxes—are flat-rated. People pay the same rate, whatever the value. We pay 20% VAT whether we are buying something for £10, £100 or £100,000. Stamp duty, however, is a progressive transaction tax, with a lower rate at the bottom end that progressively goes up, as it is designed now. That zero rate and lower rate for lower value properties is for social reasons. It is basically to help first-time buyers get on the property ladder, which is welcome, and to help people get up the property ladder. That is a valid social reason to have progressive stamp duty, but that reason does not apply to people buying second homes or investment properties. There is no reason to have a graduated stamp duty to help property investors get on to the property investment merry-go-round.
Sir Christopher Chope
Does my hon. Friend also agree that somebody in Christchurch who is having to buy an average priced house at the cost of £405,000—as compared with someone in Louth and Horncastle, who can buy the same house for £200,000—should not be taxed double, in a sense, in addition to having to pay a higher mortgage?
Anthony Browne
I thank my hon. Friend for that intervention. He proposed earlier that stamp duty should be based on the area of the property; I have some reservations about that for economic efficiency reasons. One of the considerations of taxation should be the ability to pay. If someone is buying a house for £400,000, clearly they will be able to pay a bit more tax than if they were buying a house for £200,000. But if the Government follow my proposal to get rid of stamp duty on residential properties altogether as an objective, his constituents will not have to pay any stamp duty whatsoever. They will pay the same stamp duty as the people buying houses in Louth.
Victoria Atkins
It is a pleasure to rise after the stirring final sentence of my hon. Friend the Member for South Cambridgeshire (Anthony Browne). I thank Members around the Chamber for a really interesting and constructive discussion that has sometimes veered, dare I say it, into almost a philosophical debate about the very existence of stamp duty, markets, supply and demand and principles of economics. It has been a fascinating debate, and I thank all Members, particularly my hon. Friends the Members for Christchurch (Sir Christopher Chope), for South Thanet (Craig Mackinlay) and for South Cambridgeshire, for putting forward their long-considered thinking on this particular tax. In the interests of frankness, I have to manage expectations and say at the Dispatch Box that we have no plans to abolish stamp duty land tax, precisely because it raises billions of pounds a year, but I suspect that will not stop my hon. Friends.
My hon. Friend the Member for Christchurch asked a specific question about a flat rate of 1%. I had hoped to be able to answer it in this debate, but I am not able to, so I undertake to write to him. He and others across the Committee raised the very important issue of housing supply. This affects affordability in all our constituencies, including areas that have popular tourist destinations such as the constituencies of the hon. Member for Westmorland and Lonsdale (Tim Farron) and my hon. Friend the Member for Christchurch, and also city centres. That is why, as part of our work over the last 12 years, since spring 2010 more than 800 households have been helped to purchase a home through Government-backed schemes including Help to Buy and the right to buy. We operate a range of relevant schemes that make home ownership more affordable, including the lifetime ISA, and those are important precisely for the reason that has been argued so cogently by Members: the housing market has at times raced ahead of local incomes and affordability.
Colleagues across the House raised the issue of building new properties, which has been a subject of debate when considering other pieces of legislation before the House. I hope Members will be pleased to hear that in 2019-20, almost 243,000 additional dwellings were delivered—that is a net figure—which was the highest in nearly 30 years, and the Government are on track to meet their commitment to deliver 1 million additional homes across this Parliament. Colleagues also raised the very important issue of the supply of new affordable housing, which is a priority for the Government. In the spending review of 2021, we confirmed £11.5 billion of funding for the affordable homes programme from 2021-22, which is the largest cash investment in affordable housing for a decade, providing up to 180,000 new homes across England.
My hon. Friend the Member for South Thanet brought his expertise as a chartered accountant into the Chamber; he is on another matter of House business and apologises for not being able to be here now. He raised the issue of retirement downsizing. The point I will make—and I hope to repeat it to him in person—is that the measures set out in the Bill will also help those who are looking to downsize. If someone is moving from a property in, say, the second tranche of tax down to one that is zero-rated, they of course will be able to benefit from that. It will reduce the stamp duty charge for movers by up to £2,500.
My hon. Friend the Member for South Cambridgeshire came up with a great many ideas, which I know he will continue to raise with me through his chairmanship of the Conservative Back-Bench Treasury committee. I take his point about other taxes being involved in the average purchase of a home, such as, we hope, when people are able to buy furniture and make the changes we all want to make when we purchase our next home. I hope that measures such as the energy-saving materials VAT exemption will help in some of those instances. However, I appreciate his point about the lever that stamp duty can apply.
Before I move on to the Opposition amendment, I want to reiterate that the Bill as it stands will mean that 43% of transactions—our constituents buying their homes—will not involve stamp duty. It will also mean that 98% of first-time buyers in several regions will pay no stamp duty. Again, I hope that addresses some of the issues raised.
The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) urges us to support Opposition amendment (a). To put it into context, there were about 1,025,000 residential transactions in the year 2020-21, of which around 237,000 related to additional property transactions, which includes not just second homes but buy-to-let properties. I will come in a moment to the significance of the rental market in this debate. As my hon. Friend the Member for North Devon (Selaine Saxby) set out so starkly, there are real issues in the housing and rental markets in particular parts of the country, and we want a national tax to help across England and Northern Ireland.
The Opposition amendment would remove purchases of additional property from the scope of the Bill and the temporary cut to stamp duty land tax, which we argue would have an impact on rental supply and, in turn, tenants. Through the 3% surcharge in the Bill, we are ensuring that those who purchase additional homes—in other words, both landlords and those purchasing second homes—will still pay stamp duty. Those buyers are not exempt from stamp duty; they will all continue to pay stamp duty, because the 3% surcharge will continue to apply to all of them. As I described, a sliver of properties within the £125,000 to £250,000 price range are affected. Even with that sliver, the maximum saving possible for those purchasing additional properties is £2,500.
I want to put this amendment into the context of the private rental sector. The 4.4 million households in the rental sector remain a vital part of the housing market. Renting is the long-term housing reality for many. While we would very much like renting to be a stepping stone to people buying their own homes, we have to understand that, in certain parts of the country, the markets are so hot that for many people, including those people we would love to encourage to be first-time buyers, renting their home is the reality. We must therefore ensure that the measures we take do not imperil or endanger that market, particularly when households are struggling with the cost of living. Further constraints on rental supply will mean higher costs for tenants. My hon. Friend the Member for North Devon set out the significant impact on and decline in the long-term rental market in her constituency. We understand from Zoopla data that rental prices in the country increased in August by nearly 12% year on year. We argue that accepting this amendment would make that situation worse.
We understand the impact of second homes on some of our most popular tourist destinations, such as the south-west. In fact, we are taking practical measures to address that.
Through the Levelling-up and Regeneration Bill, we are setting a new council tax premium on second homes of up to 100% and strengthening the existing premium on empty homes of up to 300%. That means that someone with a second home could face an additional council tax bill of nearly £4,000.
Tim Farron
To follow up on that, is it not right to say that people who have second homes pay additional council tax only if those homes are empty and unfurnished, so a very small percentage of those who have second homes will be affected? Does the Minister understand the evidence that the 2020 stamp duty cut fuelled a second home boom? On that basis, why has she done nothing to listen to rural communities such as mine about that and to mitigate it in some way by accepting my amendment or that of the Opposition?
Victoria Atkins
If I have understood the hon. Gentleman correctly, he has misunderstood the measures in the Bill, which introduces a premium on second homes of up to 100% and a strengthening of the existing premium on empty homes. I appreciate his point about empty homes, if people are moving or returning to their second homes, but that is not the scenario everywhere—indeed, in my constituency, I can think of examples where that is not the case. We are trying to use practical measures so that local communities can decide how to deal with it through council tax.
I was talking about complexity. We want to ensure that the system is as simple as possible for taxpayers, which is why we have the consistency of rate bands between the standard rate and the rate for additional dwellings.
Amendment (b), which was tabled by my hon. Friend the Member for Christchurch, seeks to extend the period from 31 March 2025 to 31 March 2028. It is important that the Government maintain a commitment to fiscal responsibility and that requires difficult decisions, as I have set out. The Chancellor was clear about that in the autumn statement, and I hope that the ministerial team have been clear about that when we have spoken at the Dispatch Box. The Government will continue to take difficult decisions to get the public finances on a sound footing and to get debt falling in the medium term.
We therefore announced that the stamp duty cut will end in March 2025 as part of that commitment. It will remain in place until then to support the property market through what we all acknowledge are difficult times. We believe that we have struck the right balance between ensuring support for the jobs and businesses associated with the housing market and the Exchequer cost.
The remaining amendments tabled by hon. Members on both sides of the Committee refer to reports and reviews, if I may summarise them in that way. As my hon. Friend the Member for South Cambridgeshire reiterated, it is a fundamental principle that we are loth to include reporting and reviewing requirements in primary legislation. In any event, we do not believe it to be necessary, because the Government already publish a wealth of data on those matters. For example, HMRC publishes data on property transactions and stamp duty land tax receipts, including data on the use of first-time buyers’ relief. To help hon. Members to understand what that means for our constituents who are first-time buyers, the Bill will mean that they can access up to £8,750 in relief. It is a great shame that Opposition Members propose to vote against that relief.
The Department for Levelling Up, Housing and Communities also publishes the English housing survey. Data on property prices, including at a local level, is published through the Land Registry. The Government published a summary of the measure’s impacts, including on the Exchequer, in November’s autumn statement. I hope that hon. Members who have asked for that data and those reviews will look at that wealth of information and draw their own conclusions.
I thank hon. Members for this debate, which I very much welcome, but I commend the Bill to the Committee. I particularly commend the Government amendments to enable first-time buyers in our constituencies to get on to the housing ladder, and to help other constituents move up the housing ladder and continue to thrive in our country in the next couple of years.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
Before I put the Question, I should just say that I am anticipating three votes: two in Committee and one on Third Reading. The first vote will last for 10 minutes and the two subsequent ones will last for eight minutes each, so if I were you I really would not go anywhere after voting in the first Division.
Amendment proposed to amendment 1: (a), after “transaction” insert
“(except in relation to additional dwellings)”.—(Abena Oppong-Asare.)
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).
Question put, That the amendment be made.
Stamp Duty Land Tax (Temporary Relief) Bill
Wednesday 11th January 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2023 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 10 January 2023 - (10 Jan 2023)
Stamp Duty Land Tax (Temporary Relief) Bill
Wednesday 18th January 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 10 January 2023 - (10 Jan 2023)
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, the aim of the Bill before us today is to support the property market and reduce costs for first-time buyers and home movers during a difficult period for the economy. The Government have a long commitment to supporting home ownership. Since 2010, we have helped more than 800,000 households purchase a home through government-backed schemes such as Help to Buy and the right to buy. We have made sure that the UK is building the high-quality homes that we need. In 2019-20, more than 242,000 homes were built, the highest number of net additional homes in 30 years, but we need to do more, and remain committed to the 300,000 new homes target. We have invested in the affordable homes programme, with an £11.5 billion commitment through this Parliament leading to 180,000 affordable homes, including thousands for social rent. We have removed the housing revenue account cap for local authorities to support them to build more social homes. This Government also supported social renters at the Autumn Statement by limiting social rent increases to 7% in 2023-24, saving the average social renter £200 next year, and we remain committed to abolishing Section 21 evictions.
However, the tax system needs to work for those looking to get on to or move up the housing ladder, and the Government have previously made changes to support their objectives on home ownership and the property market. Stamp duty land tax must work for all. In April 2016, the Government introduced higher rates of stamp duty for purchases of additional dwellings and recognised the impact that buy-to-let investors and purchasers of second homes were having on the ability of first-time buyers to get on the housing ladder. The following year, in the Autumn Budget 2017, the Government permanently introduced first-time buyers’ relief. This increased the threshold before which those buying their first home started paying stamp duty to £300,000. It was under this Government that first-time buyers gained a permanent comparative advantage over other purchasers, and this relief has supported almost 700,000 purchases since its introduction.
The Stamp Duty Land Tax (Temporary Relief) Bill builds upon this context. First, it will increase the nil-rate threshold for stamp duty land tax for all purchases from £125,000 to £250,000 until 31 March 2025. Secondly, it will increase the nil-rate threshold for first-time buyers from £300,000 to £425,000. A first-time buyer couple in the south-east buying an average new-build property worth £490,000 will see their bill reduced from £9,500 to £3,250—a saving of £6,250 which they can put towards their deposit or new furniture. Thirdly, the Bill will raise the maximum purchase value for first-time buyers’ relief from £500,000 to £625,000, something which will help those in places where affordability problems are most acute. Together, these measures mean that around 43% of all purchasers will pay no stamp duty whatever.
As part of this Government’s commitment to fiscal responsibility and to getting debt falling in the medium term, these changes to stamp duty will end on 31 March 2025. The tax cut will remain in place until then to support the property market through difficult times and to continue our support for first-time buyers. Hundreds of thousands of jobs and businesses rely on the property market, and the Government are committed to supporting them with these measures.
The stamp duty cuts will mean that more than half of all transactions in the east Midlands, the north-west, and Yorkshire and the Humber will pay no stamp duty until 31 March 2025, with six in 10 transactions in the north-east having no SDLT liability. A pensioner in the east Midlands downsizing to an average-priced semi-detached house worth around £230,000 will now save £2,100 in stamp duty costs. They will pay nothing because of the Government’s actions.
The Government are lifting families, home movers and first-time buyers out of stamp duty and continuing their record of support for home ownership. They are supporting the market and ensuring that this support remains responsible. This is a significant reduction in the cost of moving home for many in the country and will make getting on the ladder far easier.
Importantly, while it is right that people should be free to invest in or buy a second home, the Government believe it is right that those buyers pay higher rates of stamp duty. The higher rates for additional dwellings introduced in 2016 apply three percentage points above standard residential rates of stamp duty. This 3% surcharge will remain in place. It is important to note that no one purchasing an additional property will be taken out of paying stamp duty.
To conclude, the Government believe that stability is the bedrock on which we build growth. The Bill is a fiscally responsible way to support the property market through challenging times and open up the dream of home ownership to more people, to give them a stake in the success of the British economy. Some 90% of those claiming first-time buyers’ relief will no longer pay any stamp duty until 31 March 2025—a significant and meaningful addition to the Government’s record on home ownership. For those reasons, I beg to move.
Lord Greenhalgh (Con)
My Lords, I thank my noble friend the Minister for that very articulate exposition of government policy around the desire to increase home ownership and how important it is to remove the barriers, not only for first-time buyers but for people who own their homes to be able to move. I thank noble Lords who have remained in the Chamber; it is always nice to have at least a few people here on what I consider a seminal topic.
The herd, if you like, gathered around the Levelling-up and Regeneration Bill—I would have been one of about 75 Back-Bench Peers speaking if I had participated in that Second Reading debate—but the key to housing is often what we would call the second-hand market. Some 90% of transactions in housing are, essentially, as with motor cars, in second-hand homes.
If you tax mobility, as you do through the stamp duty land tax, people tend not to move. My parents’ generation moved every seven years, but now people typically do not move at all. That often means that elderly people reside in homes bigger than they feel comfortable in. They may want to stay in the family home, but as you age it becomes harder to climb the stairs and so forth; even with housing adaptations, it is inappropriate for them, and they might like to downsize. That is often harder than we think because of an absence of retirement community homes. Mobility generally has shrunk over the decades. It is important that we bring about changes to increase mobility so that people can get on to and climb the housing ladder of opportunity.
I went to the House of Lords Library. I had never used it for research before, but I really wanted to see whether the Laffer curve applied—that if you cut stamp duty land tax, your tax take would increase. I thought that maybe it would, but I was absolutely wrong. It is obvious when you think about it; I have about 65 charts I could share with noble Lords but I do not think that would be particularly helpful. Essentially, the housing market is driven by the wider economy, but what you do see from the statistics is this: if you increase stamp duty, as we have done remorselessly in the decades from 2000 to the present day—except for this brief respite, and a previous respite for a period of time under Chancellor George Osborne—you will see a reduction in the number of transactions overall. That comes through very clearly. As soon as the first relief was introduced because of Covid, transaction levels in London rose from 4,800 to 5,300, and in the rest of the United Kingdom transactions also rose dramatically. While the tax take may not have, people were moving more, which I think is a good thing.
My first question to the Minister is: is there a longer- term commitment to reduce this tax on mobility so that we can see people moving and can get closer to the era when people could move more easily—rather than building sideways, upwards and downwards—to homes that are appropriate for their needs, so they have a bigger home when they have a family and then can downsize in their older years?
My next point is the other side of what the noble Baroness said about the north-east. Okay, six out of 10 properties do not pay any stamp duty at all, but this is a tax that falls on London. As a Londoner, I am conscious of the fact that, until recently, two-thirds of stamp duty was raised in London alone. That has dropped a little with the tax reduction to 55%, but we have to be cognisant that jamming up the London market is not necessarily good for our capital city or for the wider economy. We need to be aware that stamp duty is simply much higher than what we were used to. In the first decade of the 2000s, the highest you could pay on a property transaction was 3%, but we have seen that balloon over time.
I am delighted to support the Government on this. As someone who started in a town hall and worked through to City Hall, I know that it is important to create that housing ladder of opportunity: out of public housing into part-owning your own home to fully owning your own home. That is a noble thing to encourage, and I am delighted that the Government are setting forward, with a sense of consistency, the need to reduce stamp duty to land tax levels.
I have one last question, which was raised with me by the noble Baroness, Lady Watkins, about a nurse. We know that nurses struggle, but this nurse got a shared-ownership property, owning 25% of her home and paying rent on the remaining 75%. That tenure is not full-blown home ownership; it is not on the last rung but, if you like, the first rung of the ladder of home ownership. She is now looking to purchase a home further away but to fully own it with a mortgage. Does the relief that has now increased from £500,000 to £625,000 still apply to that move? Will she be seen as a first-time buyer? I ask the Minister to find out the particulars of that.
I congratulate the Government. Whether you are the right honourable Member for Spelthorne or the right honourable Member for, I think, somewhere in Surrey, both Chancellors are absolutely behind the idea that, over time, we must bring down the burden of this tax on the ability to move home.
Baroness Kramer (LD)
My Lords, we shall obviously not oppose the Bill. It extends stamp duty relief until March 2025 to a larger group of first-time buyers and raises the lower-rate threshold for all buyers, helping a limited number either of better-off people or people living in higher-priced regions.
I should note that the Chartered Institute of Taxation has drawn attention to loopholes and anomalies in the drafting of the Bill. While this House can do nothing to tackle that, I hope the Government will follow up what the institute has said because one of our curses is poorly drafted legislation that then has to come back to this House. However, the Bill will do little to achieve its main purpose as outlined by the Government: stimulating the housing market and increasing residential investment and spending on durable goods.
Mortgage interest rates are the issue, alongside the cost of living, as everyone in this House knows. According to Nationwide, UK first-time buyers’ mortgage costs are the highest since 2008—on average, 39% of full-time salary after tax, despite a 2.5% fall in house prices, and the Bank of England is not expected to be done in raising interest rates. A modest change to SDLT does not compensate for the surges in interest rates driven by the Government’s economic mismanagement.
According to the NAO, 1.4 million households face higher interest payments this year as their fixed-rate mortgages expire. The lucky households with good credit will see their mortgage interest more than double, from 2% to more than 4.5%, and the proposals to help—for example, by offering interest-rate-only deals—provide only temporary relief. The Financial Conduct Authority said last week that 200,000 households had fallen behind on their home loans by mid-2022, while another 570,000 households were
“at risk of payment shortfall”
within the next two years because their mortgage costs would be more than 30% of their income.
The housing market requires more housing supply, not short-term temporary fixes. The Government are nowhere near their 300,000 new homes target and affordable homes are in even shorter supply. Shelter reports housing waiting lists of 1.2 million, with over 120,000 children in temporary accommodation. The construction industry is suffering huge workforce shortages and economic uncertainty is discouraging investors.
Members in the Commons, especially my colleagues the Members for Westmorland and Lonsdale and for North Shropshire, argued for amendments that would have provided far greater protection against the unintended consequences of advantaging second home buyers. In areas such as the Lake District and north Shropshire, second home buyers consistently outbid local people and the drop in full-time occupancy is undermining communities. In some areas, purchases of second homes now amount to 80% of total purchases. In rural England, as my colleagues pointed out, there are 132,000 fewer young home owners than there were in 2010. The stamp duty cut of 2020 fuelled a second home boom and house price distortion.
We need a proper housing strategy: one consistent with our net-zero and sustainability goals, so that it really tackles housing inequality for the long term. Research for the Homelessness Monitor report showed that 300,000 households across Britain could be homeless this year. This, together with the cost of living crisis, is the issue that the Government must resolve, and urgently.
Lord Tunnicliffe (Lab)
My Lords, I am grateful to the Minister for introducing today’s money Bill. As the noble Baroness knows, we do not support this legislation but, given its status, we accept that it is destined for the statute book. With that in mind, and with important matters to be discussed on the National Security Bill, I will keep my remarks brief.
The Bill represents the last remaining output of the failed Truss-Kwarteng project. It is now some time since those individuals set fire to the British economy and then retreated to the Back Benches, claiming they had been the victims of global events. They will no doubt attempt to rebuild their reputations in the months and years to come. However, as they seek to rewrite history, the British public will continue paying for their costly mistakes—and for what? A time-limited reduction in stamp duty which, given increasing borrowing costs and the Government’s poor record on housing supply, is most likely to benefit second home owners and landlords rather than first-time buyers. We do not view this policy as a sensible use of taxpayers’ money.
I note the Government’s assertion that stamp duty savings will support the property industry and boost money going elsewhere, such as to removal services and do-it-yourself stores, but believe they are flimsy at best. The current Chancellor’s decision to make this a time-limited measure, rather than the permanent one envisaged by his predecessor, suggests that the latest Administration agree. Households across the country are still dealing with the disastrous consequences of the Truss Government’s failed mini-Budget through higher mortgage payments and rents. That month of madness, coupled with the Conservative Party’s wider mismanagement of the economy over 13 years, means the property market has cooled in recent months. There is no doubt that this presents challenges for many, but there are far bigger housing-related issues for the Government to address than the rate of stamp duty.
Late last year, in an attempt to avoid an embarrassing early defeat at the hands of his Back-Benchers, Rishi Sunak agreed to water down housebuilding targets for local authorities. Nobody wants homes to be built in locations that are not suitable, but we are not going to solve our ever-worsening housing crisis if the Government continually duck challenges around supply. A stamp duty reduction scheme which offers a discount to those buying second, third and fourth properties does not increase supply. Instead, it is likely to have a similar effect to that of the last reduction: pushing up prices and preventing first-time buyers getting on the ladder. We are aware of steps being taken in other legislation, such as the Levelling-up and Regeneration Bill, to discourage ownership of multiple dwellings, but these two policy initiatives appear to be in conflict.
This Bill provides further evidence that the Conservative Party is out of ideas. The last stamp duty cut did not provide as much help to first-time buyers as promised and its overall effect on the market put many starter homes out of their reach. Ministers are seemingly repeating the same failed experiments, desperately hoping the outcome will be different.
Taken alongside other government decisions, this Bill will do nothing to improve the serious issues with our housing market. It will not boost supply or make mortgages more affordable for young people. It does not represent value for money for the taxpayer. People want security, stability and affordability, not costly gimmicks which fail to deliver results. Only the Labour Party has plans to boost housebuilding and support more people into home ownership.
Baroness Penn (Con)
My Lords, I thank all noble Lords for their contributions to this short debate on the Bill today. In particular I thank my noble friend Lord Greenhalgh as the only Back-Bench speaker in the debate. My noble friend asked a number of questions. First, he talked about the need for mobility in the housing market. That is something I agree with him on. That can be delivered in a number of ways. Having better and more suitable homes for people to downsize to is one element of it; supporting Build to Rent and having longer-term tenancies is another. My noble friend is far more of an expert in these areas than I am.
While we support mobility overall, and there are a number of government measures aiming to do that—stamp duty is part of it—we have to balance action in that area against the fact that it is also an important source of government revenue. We think the action we have taken in this Bill strikes the right balance, providing temporary support during a difficult time for the economy, in particular the housing market as we see higher interest rates, with the need for fiscal responsibility too.
We made some other reforms to stamp duty. For example, in 2014 there was the move from slab to slice. This aimed to improve the fairness and efficiency of the tax system, as each new SDLT rate is payable only on the portion of the property value falling within each band. That removes some of the cliff edges from the system.
My noble friend also spoke about the higher property values in London meaning that it disproportionately contributes in terms of stamp duty land tax, and I acknowledge that. In the temporary reforms we have put in place, increasing the threshold at which you can claim first-time buyers’ relief helps first-time buyers in the capital facing those higher rates.
My noble friend also asked a specific question about shared ownership. First-time buyers’ relief is available on shared ownership purchases. Relief would then not be available on subsequent purchases. However, where someone intends to staircase up the shared ownership ladder, the option is available to them to pay 100% of the stamp duty up front and therefore claim the first-time buyers’ relief and not pay it again as they staircase up. I think that is a useful element of the system.
Turning to some of the points made by the Chartered Institute of Taxation and raised by the noble Baroness, Lady Kramer, the Government are aware of those points and the ones raised by the Stamp Taxes Practitioners Group, which relate to the technical detail of the existing first-time buyers’ relief legislation. We have asked officials in HMRC and the Treasury to work with those groups to discuss their comments.
More broadly, both the noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe, made points about mortgage costs, interest rates and housing supply in general. As a Government, we are doing everything we can to hold increases in mortgage rates down as much as possible, in so far as we have an influence on them through our actions. That is why we have taken very strong steps to demonstrate Government’s commitment to fiscal balance and sound money. There is a longer-term trend of interest rates and mortgage rates rising since last autumn in response to global trends, including the illegal invasion of Ukraine. Interest rates are not rising solely in the UK; the US Federal Reserve has been raising its base rate since March 2022. The pricing of mortgage products is a commercial decision for lenders, and interest rate decisions are taken by the independent Bank of England.
On the noble Baroness’s and the noble Lord’s point about where there are existing mortgage borrowers who may now move on to higher rates, we have more resilience built into the system through the affordability assessments, but the Financial Conduct Authority regulations are already also very clear on the requirement that firms must deal fairly with customers and consider a variety of tailored forbearance options, including measures such as a payment holiday, partial payment or an extension of mortgage terms. Before Christmas, the Chancellor met with, I think, the regulator and banks to discuss the issue around higher mortgage rates and customers who may fall into difficulty as a result.
More broadly on housing, yes, we must do more to build more homes; that has been a consistent theme throughout this Government’s tenure. We have been doing more to build more homes: as I said in my opening speech, the figure for 2019-20 of 243,000 net additional dwellings was the highest in nearly 30 years, but we have a target of 300,000 and need to do more. I talked in my opening speech about some of the measures we took. Other areas are on SME housebuilders, which are an indispensable part of the housebuilding sector, and we have put in place a range of financial measures to support SMEs and to encourage systemic change in the lending environment, including over £2 billion of development finance under the home building fund, which will deliver approximately 60,000 new homes, and the £1 billion ENABLE Build guarantee scheme. I will not go into further detail on what the Government are doing to support further housebuilding, suffice it to say that we are committed in that area and that it will take a number of different initiatives to deliver it.
The noble Baroness, Lady Kramer, also raised the issue of second homes. We have the additional rate of stamp duty for people to pay on any additional homes they buy. We think that that is right, in recognition of some of the issues that she raised, but we also need to be cognisant of the impact that that has—or may have had—on the buy-to-let market and on the availability and affordability of homes to rent. We think that that was the right measure and that it has struck the right balance. We are also taking action in the Levelling-up and Regeneration Bill with the new 100% council tax premium on second homes and by strengthening the existing premium on empty homes.
To conclude, there is a lot to do to support home ownership and housebuilding more generally. We need to support more mobility in the market, as my noble friend pointed out, and the measures before us will support those wishing to buy or to move home in the current economic climate and the housing sector more widely. That is balanced against the need to ensure fiscal responsibility and to acknowledge that stamp duty is a source of revenue for the Government. We have struck the right balance in the measures, so I beg to move.