I beg to move, That the Bill be now read a Second time.
We face challenging times, and challenging decisions need to be made, but one thing on which I hope we can all agree is that home ownership must remain within reach, and we must support the property market where we can. To do that, we are making good our promise to ensure that hard work is rewarded and people can keep more of their hard-earned money when they buy a home.
The property industry plays a hugely important role in our economy. It is crucial to our growth prospects, and it supports hundreds of thousands of jobs and businesses. Home ownership remains one of the surest ways to give people a stake in the success of our economy, and we know that stamp duty really affects people’s decisions on whether to buy a property. The Bill confirms a significant reduction in the cost of moving home and getting on the housing ladder, which will allow more people to buy and to move each year. It will also mean more business for painters, decorators, moving companies, plumbers, electricians, and all the industries that are reliant on a healthy housing market. More transactions each year will mean that more people can move more easily to find work, and that will boost labour mobility at a time when people do not need barriers to changing jobs.
Like many Members on both sides of the House, I grew up in a country where home ownership was a dream, but an achievable one. It is only right that we give those who are now seeking to climb on to the housing ladder a helping hand, so that this dream does not slip out of reach. Since 2010, we have helped more than 800,000 households to purchase homes through Government-backed schemes such as Help to Buy and Right to Buy, and we have made sure that stamp duty land tax works for those who wish to get on to and up the property ladder.
First, in April 2016, we introduced the higher rates of stamp duty for those purchasing additional properties, which form part of the Government’s commitment to first-time buyers. These rates are 3% above standard residential stamp duty rates. The following year, in the 2017 autumn Budget, we introduced first-time buyer relief to permanently increase the price at which first-time buyers start paying stamp duty. The Government are proud that nearly 700,000 purchases have benefited from this relief since its introduction. Because of our action, the annual number of first-time buyers is at a 20-year high.
However, this is not just about how we help people purchase within the existing stock of housing; we are also boosting investment in home building and affordable housing. In 2019-20, nearly 243,000 net additional dwellings were delivered—the largest number in almost 20 years—and the Government are on track to meet their commitment to deliver 1 million additional homes during the current Parliament. In the 2021 spending review, we also announced £11.5 billion for the affordable homes programme to build 180,000 more of the affordable, quality homes that the country needs, including tens of thousands for social rent.
The Government’s cuts in stamp duty land tax were implemented on
As I mentioned a moment ago, in 2017 the Government introduced first-time buyer relief, which applied a higher nil rate threshold for purchasers who had never previously owned a property as part of our commitment to supporting first-time buyers. The Bill will expand the generosity of that relief to ensure that those purchasing their first home pay no stamp duty on purchases up to £425,000, up from £300,000. The maximum purchase value for which first-time buyers can claim the relief has also been increased, from £500,000 to £625,000.
These cuts in stamp duty will mean that an estimated 43% of transactions each year will attract no stamp duty whatsoever, up from 25% before the introduction of the Bill. No one purchasing a second home or investing in a buy-to-let property will cease paying stamp duty, as the 3% surcharge on the purchase of additional dwellings will continue to apply. More than half all transactions in the east midlands, the north-west and Yorkshire and the Humber will attract no stamp duty at all, with about six in ten transactions in the north-east having no stamp duty liability.
We are lifting significant numbers of families, first-time buyers and home movers out of stamp duty, helping those aspiring to own their own home. That means that a couple buying an average home in the east midlands worth about £248,000 would otherwise have paid nearly £2,500 in stamp duty, but will now pay nothing at all. This measure will directly help people to keep more of their hard-earned money. An estimated 90% of those claiming first-time buyer relief will now be lifted out of stamp duty entirely. First-time buyers are able to access up to £8,750 in relief following the Government’s changes.
I should make it clear that these changes apply to stamp duty land tax, which covers only England and Northern Ireland, but they also mean—through the usual block grant adjustment—an additional £100 million for the devolved Administrations in Scotland and Wales.
The United Kingdom has always been a nation of homeowners, and under our plans it will continue to be so. We are cutting stamp duty for hard-working people and supporting them in getting on to and up the housing ladder. The Bill will reduce the up-front costs of moving, it will support the hundreds of thousands of jobs reliant on a healthy property market and it will help give people who aspire to home ownership the means to make it a reality. For those reasons, I commend the Bill to the House.
Yesterday was one month since the previous Chancellor delivered his mini-Budget. Since then we have had a month of utter chaos, a month of the most extraordinary U-turns and a month in which the Conservative party recklessly inflicted damage on our economy—damage that the British public will be paying for and that will take years to fix, yet the Conservatives are clinging on to power, putting their party’s interest before the country’s. We are here today debating one of the very few remaining pieces of the former Chancellor’s mini-Budget.
As hon. and right hon. Members will know, the current Chancellor—I assume he is still in post as we speak—U-turned on almost all his predecessor’s plans. One of the measures he decided to keep was lifting the cap on bankers’ bonuses. It is particularly hard to understand why he chose to do so when even bankers themselves do not seem to have been advocating for it. In fact, it could involve reputational damage that I know many of them fear. None the less, lifting the cap remained a priority for the previous and current Chancellors.
As we know, the current Chancellor also decided to keep the legislation that reversed the national insurance rise and repealed the health and social care levy. We are glad that the Government finally followed the position that Labour set out over a year ago that raising taxes on working people in a cost of living crisis is wrong. The decision to reverse the national insurance rise was itself a U-turn by the current Chancellor, the outgoing Prime Minister and their colleagues on the position they held just last year. At least by doing the right thing Jeremy Hunt avoided doing a U-turn on a U-turn in this particular instance.
The current Chancellor also decided to keep the changes to stamp duty that were announced on
Before I address the substance of the proposed changes, I would like to ask the Minister about the process of the legislation before us. In the business of the House statement on Thursday
“a resolution relating to stamp duty land tax (reduction), followed by all stages of the Stamp Duty Land Tax (Reduction) Bill.”—[Official Report,
Four days later, the current Chancellor confirmed that the stamp duty changes would proceed. However, during her next business of the House statement on
Treasury Ministers will know that, across the country, families and businesses are crying out for stability. In the housing market, as in many parts of the economy, certainty is prized. That is why, when the stamp duty cut was announced, it took effect straight away. It had to be in place immediately to avoid giving people a reason to delay their home purchases as they waited for an announced change to come into force. Indeed, the policy paper published alongside this announcement on
“It would not be in the public interest to consult, as this may have an adverse effect on the housing market if buyers delayed purchases during the consultation period.”
Yet now, the remaining stages of the Stamp Duty Land Tax (Reduction) Bill have been delayed.
This last-minute flip-flop of parliamentary business sends the message that it is open to the new Prime Minister and whoever his Chancellor might be to change their mind over these stamp duty changes. By delaying the Bill’s remaining stages, the Government have introduced more uncertainty into the housing market, which is the last thing anyone needs. I do not know what the Economic Secretary to the Treasury, Richard Fuller, will be able to say that will give homebuyers any confidence in this matter, but I urge him to try to give them and the housing sector whatever assurances he can.
I fear that the Government have learned nothing from the mistakes they made two years ago about uncertainty when it comes to stamp duty. As hon. Members may remember, when stamp duty was last changed in the summer of 2020, the legislation was rushed through Parliament earlier than planned. This happened after someone thought they were being clever by briefing the press about the plans of the then Chancellor—now the incoming Prime Minister—three months ahead of their being implemented. In that debate, the former Member for South West Hertfordshire and Chief Secretary to the Treasury, David Gauke, was quoted as having said that this trailing of plans months ahead would be “hugely counter-productive”. He said that even “two days of speculation” over such plans would be “unhelpful”. So this concern is nothing new. It is crucial that stamp duty changes are not left hanging. Decisions either way must be executed swiftly and with certainty. These last-minute changes to parliamentary business seem to be another reminder that the Conservatives are not fit to govern.
As I said in the previous debate, it would be easy for us as the Opposition simply to vote for the stamp duty cut today, but it would not be right and it would not be responsible. At a time when our economy is reeling from the long-term damage the Conservatives have done, when current and future homebuyers are facing spiralling and prohibitive mortgage costs and when we are still flying in the dark as the Tories refuse to publish the Office for Budget Responsibility’s forecasts, this is not the time to spend £1.7 billion a year on this tax cut.
There is so much else the Government could be doing to support the housing market and to help people to get a secure and decent home that they can afford. Beyond restoring financial stability, they could go further and adopt some of our plans to introduce a mortgage guarantee scheme, to raise stamp duty for foreign buyers and to give first-time buyers first dibs on newly built properties. Those are some of the plans we need after 12 years under the Tories, during which home ownership rates have fallen. Compared with when the Conservatives came to power in 2010, there are now 800,000 fewer households under 45 who own their own home. At the same time, nearly 1 million more people are renting privately. Some of them might once have been hopeful that the Government would deliver on their commitment to ban no-fault section 21 evictions, but that promise was made more than three years ago. It was pushed into the long grass, and it was rumoured a few weeks ago that it was about to be dropped. Now, with a new Prime Minister coming through the revolving door, its fate is anyone’s guess. The only safe conclusion is that the Tories cannot deliver the security, stability and affordability that people need.
This debate is focused on the stamp duty changes that the Government are seeking to approve, but it cannot be taken outside the context of their disastrous mishandling of the economy. After 12 years of failure, the Conservatives have shredded any claim to economic competence they might once have thought they had. We are suffering an economic crisis created in Downing Street. The damage has been done and working people are paying the price. The Conservatives can rearrange the personalities in Downing Street, but they have inflicted damage on our country and have no mandate to govern. It is time for the British people to have a say on our country’s future. It is time for a fresh start with a Government who are ready to sort out the Tories’ mess, to grow the economy for working people and to build a fairer, greener future. It is time for general election.
I will be extremely brief and fulfil my commitment to the shadow Secretary of State for Levelling Up. The reason I rise to speak is that I met a group of constituents at the weekend and I said that I would use this debate to identify and explain the situation that they are facing in my constituency. I have listened to the Minister and to the sentiments that she put forward, which are well intentioned in many ways but do not reflect the reality of what my constituents are facing at the moment.
We have a housing crisis in my constituency, with overcrowding on a level we have not seen in maybe decades. We have homelessness, and there is no longer access to housing via council housing because our council housing stock has mainly been sold off. I do not think any new council houses have been constructed directly by the council.
The problem we face is that wage levels, after 12 years of austerity, mean that most of my constituents, particularly the young ones, are nowhere near striking distance of being able to purchase their own home, despite everything we have done, working with the financial sector, to encourage them to do so. Many people living in the rented sector and hoping to purchase their own home are seeing their wages devoured by the rents they have to pay. They cannot save up for a deposit, and when they look at mortgage rates, particularly after what has happened over the past few weeks, they have no hope of being able to cover mortgage costs.
Frankly, this Bill is no help whatsoever to my constituents. It is interesting to look at who it does help. When the former Chancellor, and soon-to-be Prime Minister, introduced similar measures during the pandemic, they benefited corporate landlords and the banks. I have 4,000 new properties being built in my constituency, and most of them will go to corporate landlords. Many will go to people moving from outside the area because of the Elizabeth line, and few will benefit local families or local young people.
We are seeing a boom in private landlordism in my constituency, where the buy-to-let property experience is one of high rents, poor maintenance and harassment by landlords, who are often completely unregulated. The Minister and the Government have said much about the Bill helping first-time buyers and about the doubling of the threshold benefiting all, but the Bill will largely benefit landlords and the banks that lend to them. As Tim Farron mentioned, the Bill will also benefit second home purchasers.
I find it extraordinary that incorporated landlords can still offset 100% of their mortgage interest against profits. Between 1990 and 2020, we saw 41,700 landlords incorporate themselves in order to benefit from what is actually a tax-avoidance scheme. My hon. Friend James Murray mentioned the cost of this programme in the previous debate. On the estimate made on the day of the mini-Budget a few weeks ago, the cost is £1.655 billion. I find it hard to see how this is compatible with what the new Chancellor is saying about a new wave of austerity having to be forced upon us because of the mismanagement of the economy in recent weeks.
The Opposition will oppose this Bill, and I fully agree. This is not the time for such a measure. We could assist first-time buyers to get on the housing ladder through housing supply and reducing overall property costs. If the Government insist on proceeding with this Bill, we could protect the first-time buyer measures by paying for them through an excess profits tax on the landlords and banks that are profiting from the Government’s measures.
Finally, I repay the debt I owe my constituents from the weekend by saying that this Bill will not help people in my constituency. We need a new council house programme, a reduction in interest rates and investment in housing on a scale never seen before. We need housing that is accessible and affordable to all. Otherwise, I will have more homeless people, more people living in overcrowded properties and, yes, more people sleeping in beds in sheds trying to survive the next winter.
I plead with the Government to drop the Bill. I hope the incoming Prime Minister will not see this as a priority and that at next week’s Budget we will have a more rational debate about housing policy.
The housing crisis in this country is huge, and it is more than just an issue of supply. In my community, as I mentioned in the previous debate, a catastrophe has emerged over the past two years. I have never seen such appalling need. The average house price in my constituency is something like 12 times the average household income. The simple fact is that any benefit from this Bill will help, if we are lucky, a fraction of 1% of people who want to buy a house but are currently unable to do so.
This Bill is not a very good use of public money when we are in the throes of a Conservative Government heroically seeking to do their best to counter the impact of a Conservative Budget. This Bill is a surviving element of that disastrous Budget. It does not seem to be the best use of money, given that the majority of beneficiaries will be wealthy people who do not need a stamp duty cut. What it will do, as we said in the previous debate, is fuel a second home boom that is already causing a huge amount of damage to communities like mine.
I asked myself why this Bill is one of the few survivors of the disastrous mini-Budget. I can only conclude that it is because the people who are damaged and offended by it live in rural communities, so the Government feel that they can take them for granted. I put it on the record that these people will not be taken for granted. Again, the average house price in my community is spiralling towards £300,000, but people’s incomes are significantly less than £30,000 per household, never mind per individual. When there are things the Government could do to address the affordable housing crisis, it is all the more frustrating to see such a blunderbuss waste of public money.
The Government are talking about changing planning law so that developers do not need to provide affordable housing in developments smaller than 50 homes. Well, most developments in communities such as mine are smaller than 50 homes, so there will be a carte blanche for developers never to build another affordable home in the lakes and the dales, or in communities not dissimilar to yours, Mr Deputy Speaker.
I gave the Government an opportunity in the Levelling-up and Regeneration Bill Committee, which they refused to take, to give themselves and planning authorities the power, in extreme circumstances—those of us living in national parks absolutely are in extreme circumstances—to say that only affordable housing can be built in new developments. Even under existing rules, developers wriggle out of their affordability requirements and obligations by using viability assessments. They go to the development site and say, “I found a few more rocks than I was expecting. I therefore cannot afford even the 35% affordable homes that we were going to build.” Again “affordable” has a rather broad definition.
The Government could be doing a whole range of things with both new stock and existing stock. Why will they not accept the proposal I made in this place and in the Levelling-up and Regeneration Bill Committee, and will be making again, to change planning law so that second homes and holiday lets become separate categories of planning use? We could then keep a lid on the number of second homes and holiday lets in communities like mine.
It is very hard to support a proposal that is the sole straggling survivor of a disastrous mini-Budget when one suspects that the only reason it has survived is because the people hurt by it are living in communities that the Government think they can take for granted. Well, they cannot and must not be allowed to take them for granted. I am sure we will see a revised fiscal programme from the Government in the next few days, so we wait to see what it contains. I do not understand why they are clinging on to this proposal, which will do such little good even for those it helps and such harm to those it harms, when they have the chance to think again. I strongly urge them to do just that.
I thank Tim Farron for his speech. I agree with him wholeheartedly that very few people will benefit from this Bill, which does not seem to be the best use of public money.
I congratulate my right hon. Friend John McDonnell on his typically powerful speech about the problems of overcrowding and homelessness in his constituency, and about the impact on young people who are struggling to get a foot on the housing ladder. I am sure that the constituents he met will be grateful that he has aired their concerns on the Floor of the House.
As my hon. Friend James Murray made clear, Labour does not oppose the principle of additional support for homeowners and buyers. Indeed, I have seen at first hand in my constituency of Hampstead and Kilburn how the link between wages and house prices has completely broken down in recent years. It has become increasingly hard for many of my constituents to move up the housing ladder, as my right hon. Friend the Member for Hayes and Harlington pointed out. As a result, home ownership has gone down dramatically in my constituency since 2010, with private renters now accounting for 30% of the population in Hampstead and Kilburn. Across London, average private rents have risen by over an astonishing £4,500 a year compared with the position in 2010, which is miles ahead of my constituents’ average wage growth. As we have heard today, this problem is not limited to London and the south-east; 12 years of this Government has created a dysfunctional housing market in every part of the country. Tragically, after what was already 12 difficult years for first-time buyers, the Conservatives’ reckless approach to the economy has now made things even tougher for young families looking to buy their first home, and for working people struggling with their mortgage payments.
After the Government’s mini-Budget crashed the economy, 40% of mortgage deals were withdrawn from the market and mortgage rates in fixed two-year deals rose to an average of more than 6%. It is important not to forget the real-world consequences of the decisions made in this House: people looking to refinance a two-year fixed mortgage will now be paying £580 more per month, on average. That is an astonishing amount of money. For families already struggling with the worst cost of living crisis in a generation, an additional £580 a month in living costs could be crippling.
I hope the Government are taking note of the figures I am talking about, because they are not just figures; they are about real-life people who are struggling to make ends meet. Indeed, Oxford Economics estimates that if interest rates remain at the levels currently being offered, thousands of families could be facing negative equity and mortgage arrears. The Bank of England has forecast that the number of households struggling with their mortgage rates will hit a record high next year.
What is the Government’s response to the chaos they have caused in the housing market? It is even more uncertainty. As my hon. Friend the Member for Ealing North said, the Government’s last-minute decision only to give the Bill its Second Reading today sends a message to the housing market that Treasury Ministers are once again preparing for a U-turn. I would be interested to hear from the Minister today whether he believes that this time next week a stamp duty cut will still be Government policy, or whether the Government will once again follow Labour’s advice and drop this ill-thought-out proposal.
My hon. Friend the Member for Ealing North was completely right to point out that this plan will do little to help people take their first important step on to the housing ladder and that it is just another Government handout for wealthy landlords and second home owners. Labour is the true party of home ownership, which is why we have committed to a target of 70% home ownership across the UK. We will achieve that by looking at reform of the planning system to increase house building. Because if the Government keep inflating demand without increasing supply, house prices will only rise.
Our approach will mean giving first-time buyers first dibs on newly built homes and an end to buy-to-let landlords and second home owners getting in first. We will provide additional help for first-time buyers though our mortgage guarantee scheme and introduce a higher stamp duty for foreign buyers, to prevent overseas investors from buying up property and pricing out British households. Finally, we will review planning regulations so that speculators cannot prevent communities from getting shovels in the ground and building the homes they need to thrive.
If this Government were serious about support for first-time buyers, those are the sensible and costed policies they should also adopt for themselves. But this Government are not serious about home ownership and, as we have seen in recent weeks, not serious about fiscal discipline. After the damage that the Conservatives have caused to our economy with their disastrous mini-Budget, the country simply cannot afford a £1.5 billion handout to rich second home owners and buy-to-let landlords. That is why I want to echo the point made by my hon. Friend the Member for Ealing North that it would not be fiscally right or responsible to support this stamp duty cut today, because not only are we the party of home ownership; we are also concerned about economic competence and fiscal responsibility.
Our proposals to support first-time buyers are fully funded, whereas the Government have refused even to publish the Office for Budget Responsibility’s forecasts for their plans. Our proposals will help first-time buyers to get on the housing ladder, whereas the Government’s proposals will help only the rich. Our economic plan would provide stability and security, whereas the Government offer only economic incompetence and uncertainty. The Minister was worried that we were using up our big hits for this debate. He does not need to worry, because we are saving our big hits for the election campaign, which we hope will be very soon.
I thank Members for their contributions to the debate. At its start, my hon. Friend the Exchequer Secretary to the Treasury set out the critical importance of the Bill and the Government’s cut to stamp duty land tax. The Bill is important to home movers and to first-time buyers; it is important for jobs and businesses connected to the property industry; and it is important for our economic growth. Stamp duty land tax at high levels can reduce a household’s willingness to move. This tax cut will enable more people to move home each year, which will, in turn, boost economic growth through the businesses and jobs the property industry supports.
The Labour Opposition spokesman, James Murray, made points about the cost of mortgages due to recent economic uncertainty and interest rate rises. I just point out to him that interest rates and mortgage rates have been rising since last autumn in response to global trends, including Putin’s illegal invasion of Ukraine, and the UK is not immune to these trends. Crucially, interest rates are not solely rising in the UK; the US Federal Reserve has been raising its base rate since March 2022.
I am more sure of that than I am that I will be in my position tomorrow. This is a serious debate and an important point about mortgage rates has been made. I am just trying to point out the two issues: rates have been rising since autumn; and this is a global change in interest rates.
Our stamp duty cuts will help the situation by reducing the up-front costs of moving. This Bill will save a family moving into an average home in England £2,500. As the Exchequer Secretary mentioned, we are returning money that can be spent to help cover moving costs, improvements, new furniture or appliances.
The Opposition spokesman asked questions about the processing of the Bill, but he missed the fact, of course, that the stamp duty change is already in effect and the Government are continuing with the legislation. John McDonnell made some good points about house building. I just point out to him that in 2019-20 almost 243,000 net additional dwellings were delivered, which was the highest amount in nearly 20 years; and that at the spending review 2020-21 the Government confirmed £11.5 billion of funding for the affordable homes programme from 2021-22, which is the largest cash investment in affordable housing for a decade and is providing up to 180,000 new homes across England.
Tim Farron repeated the points he made earlier about issues to do with purchasing additional property. I just repeat that the Government’s stamp duty cut will ensure that about 43% of purchases each year will pay no SDLT whatever and that none of those will be purchases of second homes or buy to lets.
Tulip Siddiq, in closing for the Opposition, said that the Government somehow seem to be encouraging foreign buyers and she talked about introducing a charge for foreign buyers. I just remind her that there is already a 2% charge for non-residents on SDLT.
Let me conclude by reminding this House of what this Bill is all about. It will mean that about 43% of transactions—
Of course I am happy to look at all suggestions, including the one the right hon. Gentleman has made.
This measure will mean that around 43% of transactions each year pay no stamp duty whatever, which will help to support the housing market. I say to both Opposition spokesmen—the hon. Members for Ealing North and for Hampstead and Kilburn—that as result of this measure first-time buyers in their constituencies who would not have qualified for zero stamp duty will now qualify, and Labour will today be voting against that. I would also say to Mr McFadden and Rachel Reeves, the shadow Chancellor, who are not in their places, that the average mover buying the average house in their constituencies would not have qualified for zero-rate stamp duty land tax before this measure, and Labour will again be voting against that tax cut today.
This measure will boost labour mobility, support hundreds of thousands of jobs and businesses, increase transactions to boost the property industry, and continue the Government’s record of supporting people, including younger people, into home ownership. For those reasons, I commend the Bill to the House.
Question put, That the Bill be now read a Second time.