Stamp Duty Land Tax

Debate between Marcus Jones and Anne Main

Thursday 4th December 2014 Commons Chamber

[Mr Jones]

Again, I agree. The old system created nothing but distortion in the property market. What will happen now—as I said, I am glad it is going to happen straight away—is that people buying at £250,000, although that is not a realistic price, will pay just 1%, the same £2,500 as before, and 5% only on any amount above that, which will make a massive difference.

[Mrs Main]

As I understood it yesterday, if contracts have already been exchanged, the purchaser can choose which system to use, to allow fairness in the system. Does my hon. Friend agree that although the measure takes effect immediately, there is still flexibility?

[Mr Jones]

My hon. Friend is right and that was the fair thing to do. We must have sympathy, though, for people who completed transactions before yesterday. The new system cannot be made retrospective, which is a great shame for them, but it is a bonus for people in the process of buying property and for future buyers, especially as it will allow some people to free up some money so that they can go ahead and buy things that they will need for their new home or undertake improvements.

I have many buyers in my constituency who are buying at a price between £125,000 and £250,000, and the reform will make a massive difference to them too. They will not have to pay the full slab rate of 1% on the whole purchase price. The measure will have a major effect not just in the south-east, but in the midlands and the north of the country. Over the years many people, especially those selling and buying on, have added the stamp duty cost to their new mortgage, so they were paying the stamp duty to the Government at whatever rate, and paying that money back over 25 years or for however long their mortgage ran. On a large scale, that would cause a massive cost. The new system should reduce that burden too.

I draw the Minister’s attention to the way in which the stamp duty land tax is administered. From the Finance Act 2004 onwards, a very simple process became extremely time-consuming and convoluted, which increased the cost of conveyancing to many buyers. My hon. Friend the Minister may want to consider examining how Her Majesty’s Revenue and Customs deals with these matters, to see whether some simplification may reduce the administration costs for buyers.

I thank members of the Treasury team for the action that is being taken. It will be a great help for first-time buyers and for people who want to move on. It is a policy for people who work hard and have aspiration. I welcome it in its entirety.

Stamp Duty (Housing Market)

Debate between Marcus Jones and Anne Main

Thursday 4th September 2014 Westminster Hall

[Mrs Main]

One of the worst cases that I have heard is of people selling properties with planning permission for a large extension, so that they do not then pay stamp duty on the builder building the extension, but simply on the property that they have bought. That is the most outrageous case that I have heard recently.

[Mr Jones]

That can also happen.

We need to look at the slab rate again and to consider the distorting effect that it has on the market and the difficulties that it causes people, whether buying or selling—for people who want to sell because they want to downsize, or people who want to sell because they want to move on. That is one of the reasons why some of the suggestions that I have heard over the years to charge stamp duty to the seller would also be completely inappropriate and unacceptable; it would place a massive burden on those trying to sell the investment that they have often worked for over many years.

I make a final plea to Ministers. If they are ever minded to make any changes to how stamp duty is charged or to its rates, will they be extremely careful about how they do it? Back in the dark days of the great Labour recession in 2008, following pressure from the Conservative party, the then Prime Minister and Chancellor decided to create a stamp duty holiday. They announced it with great fanfare in the press and on the media, but it was probably six or seven weeks before the policy was implemented.

I can tell hon. Members that a flat property market was depressed further, because people did not want to conduct transactions between when that announcement was made and when the measure came in, because that would not make financial sense and they could save money. I implore Ministers to make any changes carefully and to consider the implications for the overall housing market, which is extremely important to our economy. The housing market is now on the move, which is part of the reason why our services sector in this country is doing so well.

I ask Ministers to consider the issue extremely carefully. It affects not only the south-east or London, but all parts of the country in differing ways. It creates massive distortion, because of the slab rate. I ask the Minister to consider it carefully not only in reply to the debate, but in his work on our party manifesto.