Stamp Duty Land Tax (Temporary Relief) Bill

Debate between Jesse Norman and Dan Carden

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Monday 13th July 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

This Bill increases the nil rate band of stamp duty land tax from £125,000 to £500,000 from 8 July 2020 and runs until 31 March 2021. If I may, I will speak to clauses 1 and 2, and also to new clause 1 tabled in the name of the Leader of the Opposition.

This Bill contains two clauses. Clause 1 provides for the thresholds at which stamp duty land tax is due on residential property to be increased for a temporary release period, with effect from 8 July 2020 to 31 March 2021. The effect of this is that the first £500,000 of consideration for standard purchases of residential property will be free of tax, whereas previously only the first £125,000 was free of tax. The clause changes the rules in relation to other elements of stamp duty land tax, which are affected by the temporary holiday, such as the higher rate for the purchase of additional properties and first-time buyers’ relief. The higher rate traditional dwellings will continue to apply in addition to the standard rates of stamp duty land tax. This means that for purchase of additional dwellings, the first £500,000 of the consideration will be subject to the higher rates of 3% on top of any existing SDLT rates. Further, the clause ensures that section 57B and schedule 6ZA of the Finance Act 2003, which gives effect to first-time buyers’ relief, is temporarily disregarded until 31 March 2021.

Finally, the clause makes sure that no additional checks will be due when a contract is completed after the temporary relief period has ended, if the transaction was substantially performed within the temporary relief period. This is provided that the only reason for additional tax becoming due is the return to the standard rates of SDLT after the end of the temporary relief period.

Clause 2 provides that the Bill may be cited as the Stamp Duty Land Tax (Temporary Relief) Bill. The Bill comes into force on Royal Assent, but applies in relation to transactions with an effective date on or after 8 July 2020. As a result of the resolutions passed by the House of Commons under the Provisional Collection of Taxes Act 1968, the Bill’s provisions have effectively been in force since the 8 July 2020.

I shall briefly turn to Labour’s new clause 1, which calls for a review of the impact of the Act. To that I would respond that Her Majesty’s Revenue and Customs routinely publishes quarterly and annual statistics and analysis of stamp duty land tax data, including on first-time buyers and those purchasing additional dwellings. The Government also already closely monitor those statistics and keep stamp duty policy under constant review. As part of that, we will continue to examine the effect of the temporary rate change. This is a straightforward Bill to enact the temporary relief to stamp duty land tax announced last week by my right hon. Friend the Chancellor. I therefore commend clauses 1 and 2 to the House and ask the House to reject new clause 1.

[Dan Carden (Liverpool, Walton) (Lab)]

It is a pleasure to speak in the Committee stage of the Bill. The Bill was only published at the beginning of the debate, and it has just two clauses. I will direct my remarks primarily to our new clause 1. We are asking the Government at least to accept the principle behind the new clause. I do not think the Financial Secretary to the Treasury was able to put our minds at rest on the question of which people and groups will benefit from the cut set out in the Bill. He said that it was quite untrue that it would benefit the owners of second homes or multiple homes, but I think we need a review to give us the facts. We need to find out whether first-time buyers, existing owner-occupiers moving home, buy-to-let investors, those buying second homes and overseas buyers are among groups that will benefit from the policy.

The Financial Secretary did not give us a clear response to the fact that £1.3 billion of the cost of this scheme looks likely to benefit those who are already home owners. We want the Government to commit to reviewing the Bill’s impact in an open and transparent way. We want to know whether such a large sum will deliver value for money and what the broader impact of this will be on the housing sector. The Government should want to consider how this, their flagship policy, will contribute to solving the housing crisis and how it will impact on the economy overall. Our new clause will help to achieve that, and the Government should accept it.

[Wera Hobhouse (Bath) (LD)]

Covid-19 has highlighted the deep inequalities that existed long before this pandemic. Many people have been left desperate for support. Hundreds of thousands of people already have less money coming in, and hundreds of thousands have lost, or will lose, their jobs. The Government have thrown an eye-watering amount of money at our economy, but we do not yet know how this increasing mountain of debt will be paid back, or by whom. In the meantime, paying bills, rents and mortgages has become hard for millions of households. We must therefore question whether this tax cut should be a priority for the Government. It is expected to cost £3.8 billion, yet it will mainly benefit the wealthiest. The average earner, including the young generation who are struggling to pay ever-increasing rents, let alone be able to put down enough money to buy a house, will see nothing of it. The discount might provide a tax holiday for the privileged few, but it completely ignores the fact that the majority of people are unable to buy a home of their own now, and are never likely to do so in the future.

In my constituency of Bath, the availability of housing for first-time buyers is limited and house prices are expensive. The average house price in Bath is currently more than £430,000. A first-time buyer would qualify for £10,000 under the new rates, but even that would provide little benefit to a first-time buyer in my constituency who cannot secure a deposit or who faces an unaffordable mortgage. The cut to stamp duty will not solve the real problems at the heart of the housing crisis. Housing is one of the most important sectors for job creation—I agree with the Minister on that—but where is the focus on building social homes for rent? Social homes are the only way to provide secure and affordable housing for everyone, but, most importantly, for those on lower incomes. The private sector has completely failed to build social homes, and only a huge Government infrastructure programme to build social housing, as we saw in the ’50s and ’60s, will bring our social housing stock back to where it needs to be. That would create the jobs we need as well as the homes we need. Surely at this time, genuinely affordable homes are more important than ever, and more important than a stamp duty cut.

Lastly, the climate emergency has not gone away during covid, and we know that emissions from homes account for 30% of UK emissions. Decarbonising homes is therefore crucial to getting to net zero. Improving the energy efficiency of social housing is something that the Government could do straight away. They could also require landlords to achieve minimum levels of energy efficiency in order to be able to rent their homes. We need a Government with a vision to get the economy going, not a tax cut for only the few.