Stamp Duty Land Tax (Reduction) Bill

(Limited Text - Ministerial Extracts only)

Committee stage
Tuesday 10th January 2023 Commons Chamber

2.38 pm

[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.

[Sir Desmond Swayne (New Forest West) (Con)]

Will my hon. Friend allow me?

[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.

[Barry Gardiner (Brent North) (Lab)]

rose—

[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.

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[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.

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[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.

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On the amendments about reviews, I do not think it is the purpose of legislation generally to tell the Government to do reviews, which is what the Opposition spend an awful lot of time doing. If the Opposition want to get the Government to do things like reviews, they should win an election.

[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.

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16:20

Division 133

Ayes: 184

Noes: 311

Amendment 1 agreed to.

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16:36

Division 134

Ayes: 14

Noes: 310

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16:50

Division 135

Ayes: 308

Noes: 170

Bill read the Third time and passed.