Home Information Packs and Stamp Duty

Part of Opposition Day — [19th Allotted day] – in the House of Commons at 4:52 pm on 10th October 2007.

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Photo of Paul Holmes Paul Holmes Chair of the Parliamentary Party, Cross-Portfolio and Non-Portfolio Responsibilities, Shadow Minister (Housing), Department for Communities and Local Government 4:52 pm, 10th October 2007

I fail to see how, in places such as Chesterfield and much of the midlands and the north, scrapping stamp duty would help many first-time buyers. Although the average first-time house buyer pays about £169,000, that is not remotely the position in my constituency or in many areas in the north and the midlands. I do not see how it would help there.

The proposal would not help the buyer, but it would help the seller. It is a simple matter of supply and demand. With more money across the board and a fixed amount of property, property prices increase. The stamp duty proposal would do little, if anything, to help first-time buyers. It would give more equity to existing owners. The announcement is far more likely to distort the housing market further and does nothing to rectify the real problem with stamp duty: the slab system. At present, no stamp duty is paid on a house up to £125,000. On a house costing £125,001, stamp duty is due. Under the proposal, the buyer would pay nothing up to £250,000, but at £251,000 they would suddenly have to pay £7,500. Stamp duty should be applied incrementally. It should be low at the point at which first-time buyers cross the threshold, and it should increase up the scale to multi-million pound homes, so that it hits the people who can afford it.

Real aid to first-time buyers would not include a gimmick on stamp duty; it would include measures to tackle the issue of affordable housing. The Conservative announcement smacks of token measures on affordable housing. Perhaps I am being unfair—at least the Conservatives now recognise that there is a crisis in affordable housing—but the announcement was rushed out last week in expectation of a general election. The announcement was more a case of what was left out rather than what was put in—there was no mention of affordable homes, community land trusts or long-term affordability—and it did not include anything that would solve Britain's housing crisis.

I read the conference speech by the hon. Member for Welwyn Hatfield with great interest. One line stood out:

"And today I can tell you how."

I have read the speech three times, and I am still trying to work out how the Conservatives would solve the housing crisis and, in particular, the affordable housing crisis. They will not do so through that gimmick on stamp duty. The Prime Minister has discussed his vision; the hon. Member for Welwyn Hatfield has asked us to imagine what it is like to be a first-time buyer; next, the Leader of the Opposition will tell us that he has a dream. That is cosy consensus politics at its vacuous worst.

The problem cannot be solved by raising the stamp duty threshold. It requires bold action, and the solutions are not hard to find. Community land trusts have been used in America and across Scandinavia, and pilots have already worked in this country. They can provide genuinely affordable homes for a wide range of people. Rather than handing over, as the Government seem to suggest, large tracts of public land from, for example, the NHS and the Ministry of Defence to private developers to allow them to make the maximum profit from selling houses, the Government should hand over large chunks of land to community land trusts. The value in the land would be held by the community, and individuals would buy and sell the bricks and mortar. The price would therefore be affordable from day one, which is rarely the case under existing affordable housing schemes, and property would remain affordable after it was sold.

Shared equity is another tried-and-tested model that works. When the Liberal Democrats ran South Shropshire district council, for example, the council used equity mortgages to provide low-cost affordable housing for key workers and first-time buyers. The scheme worked brilliantly, but, unfortunately, the Conservatives abandoned it after they took over.

The HIPs scheme contained some good provisions. As has been rehearsed on many occasions, the scheme's introduction was botched, and the question is whether we can salvage what was good. Having initially opposed energy performance certificates, which we have discussed, even the Conservatives now recognise that they are a good feature.

The policy on the local authority search has many attractive features. How many times do people find an attractive house at a good price, only to drop out when they discover from the search that, for example, a bypass, sewage farm or industrial estate will be built next to it? In such cases, many people pay for searches, and the only people who gain are the solicitors and other companies who carry out the searches over and again. The inclusion of one search in the HIP is a great asset to the consumer, rather than people who make money out of conducting such searches. We should consider the interests of the consumer.

In the second week of August, I was hiking on Dartmoor when a national journalist rang me to comment on the fact that personal searches, which were increasingly common before HIPs were introduced, are now rejected by mortgage lenders when conducted as part of a HIP survey. People therefore had to arrange two surveys, whereas the HIPs scheme was supposed to involve only one. Is that just initial teething trouble that the Government have already solved, or is it an insurmountable problem that renders HIPs pointless? We need the evidence and research from the Government in order to take an evidence-based decision.

I first heard of home condition surveys back in 1997, when the new Labour Government floated the idea. My only declarable interest in housing is that I have purchased two houses in the past 20 years, and I know what a boon it would be to have one good survey that includes all the details on the condition of the house. How many times do people have a survey done but, for whatever reason, the purchase does not go ahead? In such a case, 10 different people might pay for a survey on one house. Why not include one survey in the HIP? The Government bottled out on that one and abandoned it very early in the process.

The Government amendment states that certificates "can improve" the house-buying process and promises that the Government will work with the industry—the same industry that launched legal proceedings against them not many months ago—to reform further the home-buying process. On 17 August, Royal Institution of Chartered Surveyors spokesman Jeremy Leaf stated:

"The government has no idea how this"— that is, the introduction of HIPs—

"will affect the housing market...We find it hard to believe that the government is pressing ahead with this policy at such short notice without first conducting a proper market impact study."

The Government pressed ahead anyway, so now let us have the market impact study that RICS was calling for. Let the details of the pilot studies, which are still confidential, be released and let us have a proper evaluation of HIPs working in practice over this summer and into this autumn. Nine weeks is not long enough, especially during the summer holidays, when housing sales are always slight, and at a time when interest rates are at their highest since 2001 and the crisis at Northern Rock has knocked confidence in the housing market.

Along with the pilot results from the early studies, let us have a decent longitudinal study of how HIPs work in practice. On those grounds, we could support the Government in the vote tonight, but only if such a serious and open review of HIPs were undertaken in practice. If they are a disaster, according to a serious, evidence-based review, we should scrap them. If they are good, and we can rescue their good features from the botched introduction and strengthen them, let us do that. However, let us ground the decision in evidence-based policy, not knee-jerk, headline-seeking motions.