Stamp Duty Land Tax

Kit Malthouse Excerpts

Tuesday 28th October 2025 Commons Chamber

[Kit Malthouse (North West Hampshire) (Con)]

I am very sorry to hear about the antipathy of the hon. Member for Pendle and Clitheroe (Jonathan Hinder) towards the south-east. I can assure him that it is not reciprocated, and no doubt the London Members who may or may not be present for this debate will have something to say to him about the wealth and welfare of their residents.

Since this Government were elected, I have often called to mind the famous aphorism uttered by Ronald Reagan about Governments’ approach to the economy:

“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

It feels to me as if, with housing in particular, we are moving into the third of those phases. I contemplate with some alarm the idea that in chasing their huge housing target—noble though it is, and shared by the Conservative party—the Government are about to pump enormous subsidies into the housing market in the Budget. That is precisely the wrong thing to do, particularly for a Government who are struggling to create growth in the economy.

What the Government seem to have failed to realise is that if we allow capitalism to function—to do what it is supposed to do—it is brilliant at creating abundance. It has been the single greatest tool for alleviating poverty across the world that humankind has ever known, yet here in this country, Governments—not just this Government but, to my alarm, previous Governments over the past 20 years or so—have not appreciated the formula of incentives required for capitalism to function. It is particularly damaging for it not to function within the housing market, and that is especially salient for the United Kingdom, whose economy is so closely tied to its domestic housing market. Looking at the correlation between the two, it is pretty much one to one: if the housing market is doing well, our economy is doing well, and vice versa. That points to the problem that stamp duty poses.

I want to raise a few points about this motion, as well as to say that I agreed entirely with the shadow Chancellor’s excellent opening speech. First, stamp duty is not a tax on wealth, or even on property; it is a tax on decision making. It skews people’s ability to conduct their life as they wish to, and it deters decisions from being made within the housing market and bungs it up so that it does not work for anybody, wherever in that market they sit and whether or not they pay stamp duty. For capitalism to work—for a market to work—there needs to be lots and lots of transactions. There needs to be fluidity and liquidity. That is what achieves a steady price and creates abundance; people know that they can take a risk in a market, because they will find a counterparty. Scarcity is what raises prices, and that is exactly the position we find ourselves in at the moment. Punitive rates of stamp duty do to the housing market precisely what none of us wants them to do, which is to reward scarcity. They push people into other forms of economic activity, with the result that they cannot fulfil the wishes and aspirations of their family.

[Chris Curtis (Milton Keynes North) (Lab)]

I agree with the right hon. Gentleman about the importance of creating abundance in the housing market. Does he therefore think it was wrong for his party and the Prime Minister at the time to come to my constituency during the general election and campaign against the new homes being built there, which this country so desperately needs?

[Kit Malthouse]

I was Housing Minister for 12 golden months, during which, I am pleased to say, the United Kingdom achieved its highest starts and finishes of housing for 10 years either side—not entirely due to my stewardship, but nevertheless, I will take the credit. I am with the hon. Gentleman in wanting to encourage the building of a significant number of houses, and I am very pleased that large numbers are to be built in my constituency, but they have to be built in the right places. We have to protect our landscape, our countryside and our heritage, while at the same time recognising that many of our market towns need to grow and reach a sustainable size. We can have the houses; they just have to be in the right places.

I also think that we would be able to embrace more housing if we were somehow able to breach the conspiracy of crap. Excuse my language, Madam Deputy Speaker; it is a crass word, but it is a great way of summing up the fact that we are building terribly badly designed houses. There is a conspiracy between planners and the development community to produce ersatz housing across the country, rather than to build beautifully designed houses, as generations of housebuilders did before us. It will not come as a surprise to the hon. Member for Milton Keynes North (Chris Curtis) that in his constituency, as in mine, the most valuable houses—irrespective of size—are often the oldest ones, dating from the Victorian era and even earlier periods. Georgian houses command huge prices, as they are seen as desirable because of their beauty. We can have the houses, as long as we put them in the right places and they look good.

[Dr Neil Hudson (Epping Forest) (Con)]

This stamp duty policy will help to lubricate the system, but my right hon. Friend is talking about putting the houses in the right places. Does he agree that this Government really do need to follow through on that? They have to prioritise brownfield sites and stop bringing in policies that will rip up the green belt, which represents the heart and lungs of areas such as mine.

[Kit Malthouse]

I completely agree with my hon. Friend.

[Chris Curtis]

Back to scarcity again.

[Kit Malthouse]

No, the people best positioned to decide where houses should go are local people. That is why, for many years, I have been a strong proponent of neighbourhood planning. It has been proven time and again that neighbourhood planning produces more houses—15% to 20% more—than other forms of planning, especially local plans. If we get the design right and put power in the hands of local people, they will very often make the right choices, not just for their community but for the next generation.

A point that the shadow Chancellor has made powerfully is that we should recognise that a gummed-up housing market, which is currently stagnating, suppresses the renovation and construction supply chain. When people move house, they invest in redecoration; they invest in extensions, put a new roof on the house, build on the side, and do all sorts of things to their new house that are good, valuable, productive economic activity. At the moment, we are missing out on that activity.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for what he is saying, and I commend the Opposition on bringing forward this debate. In Northern Ireland, house prices have risen by 7.7%, which is the highest in all the United Kingdom. What is happening in my constituency—I suspect other Members have had this—is that young people are coming up to me and saying, “I cannot get a mortgage.” They need help. I hope that the proposal brought forward by the Opposition can give that hope. The right hon. Gentleman refers to the aspiration, which I have as well, that every person wants to own their own house. This proposal would be a method of ensuring that young people have that opportunity.

[Kit Malthouse]

I understand the hon. Gentleman’s hope for the next generation, and I completely agree with him. As somebody with three children, I hope they get the same housing opportunities and economic opportunities as I did. Sadly, given how the housing market has gone and is going, it does not look as if that will be the case, but he neatly makes the point that I made in opening my speech. To get young people on the housing ladder, a subsidy scheme would see us come full circle. Instead, we should think again about how we can have a deregulated free market that functions for them and allows the houses to be built that can accommodate them. Taking tax off young people and then giving it back in the form of housing subsidy is nonsensical.

To return to my point on the supply chain, thousands of small builders around the country are desperate for this kind of work and are seeing the housing market stagnating and their work reducing. Worse than that, in areas of high property value, those who do have capital decide, instead of moving, to build down, up or out. We therefore get densification, particularly in areas such as central London, which often causes significant problems.

Moving on, this tax does not work very well for Government either. First, as Members will know, it is pro-cyclical and crashes when the Government need it most. During the 2007-08 crash, stamp duty receipts fell by 60%. We saw a surge in stamp duty receipts during the window a year or so ago, but since then, they have been falling significantly. The Chancellor, who is facing significant fiscal problems, will see that fall even further, so the tax does not work for Government on that basis.

Secondly, stamp duty is a bad tax because of its salience. Economists have this idea that taxes have a salience, which is how much people notice they are being taken. VAT has low salience, because we do not really notice it. It is in the prices that we pay. Income tax and pay-as-you-earn have low salience. Stamp duty is enormously noticeable at a moment when people are making a huge decision about their lives. They are trying to progress their families and wham, here come the Government saying, “We are going to have a slice of your wealth.”

[John Glen (Salisbury) (Con)]

My right hon. Friend is making a brilliant speech. On salience, does he acknowledge that stamp duty has had a particularly pronounced effect in the capital, particularly for those who come to this country to invest here and create jobs? One of the prime reasons we have seen such a significant number—perhaps 16,000 people—leave this country is the incidence of that tax in the capital.

[Kit Malthouse]

My right hon. Friend is completely right, and he makes a powerful point. Anybody, whether overseas or here, who comes anywhere in the country, but particularly to London and the south-east, and wants to make a significant purchase is immediately presented with a massive bill that cannot be borrowed. It comes out of any equity that they may have spare lying around or that they may have saved up for years to build towards their housing decision. For the Government to show up and take it at that moment of significance in anybody’s life is extremely damaging. It is the same when the Government show up on the death of a relative and say, “We will take our slice.” Such taxes have enormous salience. As a result, stamp duty and inheritance tax are easily the two most unpopular taxes in the country.

[Rachel Taylor]

The right hon. Gentleman is being generous with his time and is putting forward interesting points. It surprises me that nobody on the Opposition Benches brought these points forward in the 14 years they were in power. Stamp duty land tax is not a new tax; it is a tax that went up under the last Government, yet the Conservatives had brought forward no proposals on it until this unfunded announcement at party conference a few weeks ago.

[Kit Malthouse]

The hon. Lady should not assume from the outward utterances that there was not an internal conversation going on within the party about our tax strategy. Those in the Chamber who shared the Cabinet table with me will know that that was often a vigorous conversation. I will leave it at that.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Will the right hon. Gentleman give way?

[Kit Malthouse]

I will in a minute. The third point I want to make, which I guess is the one that might appeal most to Government Members, is that this tax is generationally unfair. Younger people move house more often, so they are more exposed to this tax. The younger someone is, the more likely they are to be building a family, to require more space, and to be moving up the ladder. Older people tend to sit still. They sit pretty on their capital, which is often in unmortgaged houses. Because of the lack of a market, they generally under-occupy the houses they own. When looking at stamp duty, we have to look at generational fairness, too.

In my constituency, hundreds and hundreds of aspirational families need more space. They would like to move up the ladder. They have worked hard and accumulated a deposit and the money that would allow them to move, but they want to spend that money on curtains, carpets, decoration and all the rest of it. They are deterred from moving by this tax. If we are to be fair to the next generation, we have to not only build the houses that they want to buy, but make it cheap for them to buy them, and that means cancelling stamp duty.

For all those reasons—to ensure fluidity and liquidity in a market that is skewed to produce artificially high prices; to ensure a market in which developers take a risk and build more houses, and landowners put land forward; but fundamentally for a generation who are being denied access to housing—we need to take seriously the idea that stamp duty is at the heart of the problem, and we need to abolish it entirely. The Liberal Democrats say that abolishing it will raise prices. It of course raises prices if we tell people that there is a window. That would result in frantic activity from those who are desperate to buy. If the abolition becomes permanent, we get a liquid market that achieves a real price, notwithstanding the initial bump.

As for those who say that the savings cannot be found, we should be able to find this amount of money, given the size of the Government’s budget, as my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said. I had a look this morning, and I could find 50% of the amount in the Department for Transport’s budget, no problem. The other half could come from the welfare reforms on which the Labour party bottled it. We could easily find the money and do the whole country and the economy an enormous favour.

--- Later in debate ---

[Saqib Bhatti]

First of all, it would increase mobility in the housing market. As my right hon. Friend the Member for North West Hampshire (Kit Malthouse) stated in an incredibly eloquent speech, it would also mean that the construction industry and all the peripheral jobs would start to mobilise. It would create economic growth—I suspect that the figure of £1.2 billion is probably a bit of an underestimate, and that abolishing stamp duty would actually create more growth. We are talking about creating jobs, making people wealthier and being aspirational for the aspirational, whereas Labour Members are talking down a credible policy that would put money on the table for some of our poorest people. Ultimately, abolishing stamp duty would mean that more and more people are able to get on to the housing ladder.

Let us face it: the Government are not going to meet their housing targets. It is already quite obvious that they are massively behind, and it will not be possible to meet their targets. They are killing off aspiration and confidence in the economy, and house builders will not want to meet the targets—unless, of course, they are met with huge subsidies. The question I have for those on the Government Benches is this: given the current economic situation, how much representation have they made to their Chancellor about introducing growth principles and cutting taxes so that people have more money in their pockets? The answer will be none, because that is not happening.

The hon. Member for Loughborough (Dr Sandher) said that he was not making an argument for not cutting welfare, but he did not put a figure on the table. We know that the welfare bill is ballooning, and it started ballooning post covid. We intervened during the pandemic, which had to happen. We saved a £2 trillion economy, we saved businesses and we saved jobs. We did all those things—sometimes with the support of those on the Opposition Benches and sometimes without, I am sad to say—to save the economy. Of course, all of that comes with a cost. It is now right that we look forward to make sure that we are putting proposals on the table that help grow the economy and, by the way, help the Chancellor to get out of this mess. I want her to do better, because right now I have constituents who are struggling, who are anxious and who are worried. Her policies, backed by those on the Labour Back Benches, have contributed to higher inflation and a higher cost of living. These are all consequences that they backed by walking through the voting Lobbies.

There is a Budget coming. Although Labour Back Benchers may be talking in silos, the Government are already briefing the papers about all the taxes that will rise. They talk about “serious Government”, but they are not talking seriously about the cuts that they will have to put on the table, because the Chancellor knows that the moment she does that, it will be her Back Benchers who stab her in the back. That is her fundamental conundrum, because she also has to placate the bond market, where we have highest bond yields. I see Labour Members shaking their heads, but that is the reality of what Back Benchers are dealing with. We are putting good proposals on the table that would mean that young families who want to get on the housing ladder—[Interruption.] I am happy for the hon. Member for Hitchin (Alistair Strathern) to intervene if he wants. No? I was offering him an opportunity, because I was getting distracted by his chuntering.

The reality is that most serious economists, such as Dan Neidle and those at the Institute for Fiscal Studies, have said that stamp duty is a bad tax. In fact, the hon. Member for Swansea West (Torsten Bell), who I hear has been instrumental in writing the Budget, has talked about stamp duty being a “bad tax”. We all agree on that, so we have put a funded policy on the table that the Chancellor is going to need. Surely this is something that we should all take seriously, because the Government will need answers. I suspect we will come back to that.

A lot has been made of the Chancellor’s fiscal rules. The Chief Secretary to Treasury said that they are “ironclad”, and I suspect they are until the next ones. We have a golden rule. In the spirit of rules, the Leader of the Opposition has created a golden rule, which is that for every £1 saved, half will go to cutting our national debt. Surely we can all get behind that. When the interest on our debt is something like £100 billion a year, surely we can get behind that. When the Chancellor is borrowing more month after month to meet everyday spending, as is obviously happening, we should get behind that rule.

The last point I want to make is about the cliff-edge argument. As my right hon. Friend the Member for North West Hampshire mentioned, we had the window during covid. I was one of those on the receiving end of not being able to buy a house at that time. I was looking for a house for my new family, and houses were going quickly because people were trying to beat the cliff edge at the end of the stamp duty window. This proposal is not the same, because this gets rid of such a window, and it means that more and more people will be able to buy houses.

[Kit Malthouse]

I am perplexed by the argument the Liberal Democrats have advanced that abolishing stamp duty will raise prices. Presumably the quid pro quo is that raising it would lower prices, so why are they not proposing that policy?

[Saqib Bhatti]

My right hon. Friend makes a good point, and I am sure the Liberal Democrat spokesperson will address it, but that speaks to the economic incoherence of what they have presented.

Fundamentally, we believe in property rights. We believe in the ownership of property and the rights that derive from it, which are among the freedoms—the fundamental freedoms—in this country. It was a moment of great pride when I got the keys to my first house, and I am sure it is the same for others. Cutting stamp duty is the right thing to do, and if we win the next election, that is exactly what we will do.