Stamp Duty Land Tax (Reduction) Bill

(Limited Text - Ministerial Extracts only)

2nd reading
Monday 24th October 2022 Commons Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

19:50

Division 70

Ayes: 288

Noes: 152

Bill read a Second time.