I beg to move, That the Bill be now read a Second time.
Just before the Christmas recess, my right hon. Friend the Chancellor made a statement announcing a package of measures designed to help with the problem of mortgage arrears and repossessions and to stimulate the housing market generally. The Bill gives effect to one aspect of my right hon. Friend's package—his proposals to increase the stamp duty threshold from £30,000 to £250,000 for eight months starting from 20 December last year. We debated last week the resolution that founds the Bill.
This is a short Bill. Clause 1 lifts the stamp duty threshold for purchases of land and buildings up to £250,000, applying to documents executed between 20 December last year and 19 August 1992. Clause 2 provides a procedure for giving refunds where documents have been executed since 20 December 1991 and stamped before 16 January, the date the resolution took effect.
Stamp duty on property transactions runs at 1 per cent. of the purchase price, and it applies to all transactions above the threshold. During the eight-month moratorium, about 90 per cent. of private house purchases—about 600,000 transactions—will not bear stamp duty. That means that housebuyers, the people who generally pay the charge, will be able to save up to £2,500 on the cost of a house. For someone buying the average-priced house, it means a very useful saving of £600.
The purpose of the measure is to encourage people considering buying homes to get on with buying their houses or flats and to prompt others to bring forward their purchases to take advantage of the moratorium. That is why the threshold is lifted for only eight months; on 20 August it will go back to £30,000.
It will, of course, be a little while before the effects of the measure show up in the levels of house sales. It takes time to decide on the right house and to go through the formalities of buying, so it would be nonsensical to argue, as some have sought to do already, that the measure has failed. It is far too early to see its effects, but the measure has been very widely welcomed by the Council of Mortgage Lenders, the House Builders Federation and many others as a helpful spur to a depressed housing market.
The cost of the measure to the Exchequer will be about £110 million in the current financial year, and £310 million in 1992–93. As my right hon. Friend said in his statement, that cost will be met out of the public sector borrowing requirement saving of £1 billion from deferring the abolition of stamp duty on shares.
Over the coming months, the measure will mean that many thousands of people will pay less to buy their new homes because they will not have to pay stamp duty. I am sure that it will encourage and facilitate house purchasers and so provide a real stimulus to the housing market. I commend the Bill to the House.