Clause 211 - Rate in respect of residential property where consideration over £2m

Part of Finance Bill – in a Public Bill Committee at 12:15 pm on 26 June 2012.

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Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset 12:15, 26 June 2012

I think I should speak up for my hon. Friend the Member for Chelsea and Fulham, who probably represents more houses in this category than any other Member in Parliament, with the possible exception of the hon. Member for Cities of London and Westminster (Mark Field). He, of course, is not allowed to speak, considering his position. It is important to question what the 7% rate will actually do and its effect on the London property market. The hon. Member for Newcastle upon Tyne North made some excellent points in this regard. I will put aside most of what she said about the 50p tax rate, but she raised some important issues on the knock-on effects.

I declare my own modest interest. The house next door to me has just dug out its basement in London. Will we see people across London not moving house, but digging out their basements? What effect will that have? Will we see people buying two flats in a block and putting them together to avoid the increase in the tax, which is quite substantial? We are talking about £40,000 that is payable as soon as people go over that £2 million level, but not payable at even £1 below that limit, or at £2 million itself. What effect will that have on encouraging people to rent, rather than move property? What effect will there be in London on the mobility of labour, and particularly the international movement of labour, which is very important for the City of London? Is it coincidence that we have discussed clause 210 on stopping anti-avoidance schemes just as the rate of stamp duty land tax has gone  up? As the Government have got increasingly greedy with stamp duty—the previous Government started this, of course—has avoidance become more of a problem, leading to a constant effort to plug holes, although the situation is sieve-like, and it is never possible to plug enough of them? When the number of property transactions has been declining, is it sensible to put up taxes on property at all?