Stamp Duty Land Tax (Temporary Relief) Bill

Baroness Kramer Excerpts

2nd reading & 3rd reading & Committee negatived
Wednesday 18th January 2023 Lords Chamber

[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.