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Stamp Duty Land Tax (Reduction) Bill

Volume 725: debated on Tuesday 10 January 2023

Considered in Committee

[Sir Roger Gale in the Chair]

Clause 1

Reduction of SDLT on acquisition of residential property

2.38 pm

I beg to move amendment 1, page 1, line 2, leave out subsection (1) and insert—

“(1) This section makes modifications of Part 4 of the Finance Act 2003 in relation to any land transaction the effective date of which falls in the period (“the temporary relief period”)—

(a) beginning with 23 September 2022, and

(b) ending with 31 March 2025.”

This amendment provides that the relief from Stamp Duty Land Tax provided for by the Bill is only to apply until 31 March 2025.

With this it will be convenient to discuss the following:

Amendment (a) to amendment 1, after “transaction” insert

“(except in relation to additional dwellings)”.

This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).

Amendment (b) to amendment 1, leave out “31 March 2025” and insert “31 March 2028”.

This amendment is intended to extend the temporary relief from Stamp Duty Land Tax so that it expires at or around the time as the frozen thresholds for Income Tax, Inheritance Tax and National Insurance are due to expire.

Government amendments 2 and 3.

Amendment 15, page 1, line 13, leave out subsection (3).

This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment (a) to Gov 1).

Government amendments 4 to 12.

Clause stand part.

Government amendment 13.

Clause 2 stand part.

New clause 1—Comparison of temporary and permanent relief

“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the change in Government policy on stamp duty land from—

(a) the Plan for Growth published on 23 September 2022, to

(b) the Autumn Statement published on 17 November 2022.

(2) This review must include—

(a) an assessment of the costs of implementing the change in policy referred to in subsection (1) for the Government, the property industry, and homebuyers;

(b) an assessment of any wider costs and impacts of the change in policy referred to in subsection (1) on the housing market; and

(c) what measures the Government is planning to ease the impact on tax revenues, home purchases and the housing market of the reduction in stamp duty land tax coming to an abrupt end on 31 March 2025.”

This new clause would require the Government to publish a review of the change in Government policy to make the relief in this Bill temporary instead of permanent.

New clause 2—Review: first-home buyers

“The Chancellor of the Exchequer must conduct a twice-yearly review of the impact of this Act on the number of people buying their first home and must publish a report of this review at six-month intervals.”

This new clause is to ensure that a regular report is made on the impact of the proposed Act on the number of people buying their first home.

New clause 3—Review: second homes in National Parks and Areas of Natural Beauty

“The Chancellor of the Exchequer must publish an annual report on the impact of this Act on the number of second homes in National Parks and Areas of Natural Beauty.”

This new clause would require that an annual report is published on the impact of the Bill on the number of second or subsequent homes in National Parks and Areas of Natural Beauty.

New clause 4—Review: house prices in rural areas

“The Chancellor of the Exchequer must publish an annual review of the impact of this Act on house prices in rural areas.”

This new clause would require that an annual review is published on the impact of the Bill on house prices in rural areas.

New clause 6—Review: availability of affordable housing and the private rented sector

“The Chancellor of the Exchequer must conduct an assessment into, and publish a report on, the impact of this Act on the housing market, including (1) the impact on the availability of affordable housing and (2) the private rented sector.”

This new clause would require the Chancellor of the Exchequer to conduct an assessment into the impact of the Bill on the housing market, including the availability of affordable housing and the private rented sector.

New clause 7—Report on effect of temporary relief

“(1) The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.

(2) This assessment must include an assessment of the impacts on—

(a) the volume and value of housing transactions on the housing market,

(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and

(c) tax revenues.

(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”

This new clause would require the Government to publish an assessment of the impacts of the temporary tax relief and a recommendation before the temporary relief period comes to an end.

Government amendment 14.

It is a pleasure to serve under your chairmanship, Sir Roger.

At the autumn statement, my right hon. Friend the Chancellor set out set out how the Government are dealing with the global economic challenges that we face. The consequences of Putin’s illegal invasion of Ukraine and the covid-19 pandemic mean that we must be fiscally responsible while supporting the economy and encouraging our businesses to grow and our constituents to thrive. We need a balanced approach to support our objectives, which includes helping people get on to and move up the housing ladder—and indeed to downsize.

My hon. Friend is most generous and kind. Those of us who voted with enthusiasm for the Bill’s Second Reading on the grounds that there was to be a permanent change for the benefit of those people wanting to get on to the housing ladder are somewhat discomfited by the fact that Government amendment 1 will make it merely a temporary measure to assist those who want to do so. We want them to be permanently assisted. Can she reassure me?

I very much understand why my right hon. Friend raises that point. I know he took a great interest in the autumn statement and listened carefully to the submissions and oration of the Chancellor of the Exchequer, my right hon. Friend the Member for South West Surrey (Jeremy Hunt). We had to take some difficult decisions in the course of the autumn statement to ensure that our approach to the economy is fiscally responsible. This is one way in which we hope to stimulate the housing market in the next two years in the difficult economic circumstances we find, but thereafter we are confident that the economy will improve and we will be able to return to the status quo as it was before 23 September. However, the broader picture about reducing the taxation burden on our constituents still stands. Indeed, I hope my right hon. Friend listened with great interest to the Prime Minister’s speech last week in which he made it clear that that is our ultimate goal.

On 17 October, the new Chancellor of the Exchequer told this House that this particular element of the mini-Budget relating to stamp duty land tax would be retained. It was on that basis that the Bill was introduced in the House. It was only a month later that we had the autumn statement when the Chancellor of the Exchequer went back on what had been said earlier.

Again, my hon. Friend puts his finger on the point as to the very, very fast-moving economic conditions we have faced in the last few months. He will recall the autumn statement and the great detail the Chancellor went into in terms of ensuring that our approach is fiscally responsible. We had to acknowledge and react to the conditions as we found them then. We are confident that the sunset clause in the Bill will enable us to support our constituents. Indeed, it is happening at this very moment in time, because, of course, we brought in the measures as soon as possible immediately after the original announcement. They are helping, for example, first-time buyers get on to the housing ladder.

I am very grateful to the Minister. I listened carefully to what she was saying about global economic circumstances, in particular Russia’s invasion of Ukraine and the effect that that has had on people in this country through their energy bills. She will know that the Government set a target for a 78% reduction in greenhouse gas emissions by 2035. To achieve that, will she consider looking at whether stamp duty might be raised up or put down in accordance with the energy performance certificate ratings of properties, perhaps providing a way for households to benefit financially but ensure that they meet the Government’s target?

That is an interesting suggestion. At first blush, my mind goes immediately to the complexity of such a scheme, particularly given our proudly antique housing stock—certainly in my constituency, with beautiful farmhouses and market town high streets that are many, many hundreds of years old. I therefore think it unlikely—I will be honest with the hon. Gentleman—but he is always welcome to write to me. I will make this point: the Government’s very real progress over the last decade, on drastically cutting our carbon emissions, with the help of industry, homeowners and members of the public, should be acknowledged. Dare I say it, if it is not unparalleled across the world, we are certainly in the top few. What is more, we have tried, through measures such as VAT zero rating on energy-saving materials, to encourage homeowners and others to plug gaps and make their homes more energy efficient. So, I do not think stamp duty is the way to help, but certainly the Government have already put in place measures to try to help us meet our very, very ambitious climate targets.

The last few years have, frankly, been tough on us all and we want to help people take that next step in their lives to buy a new home. The Bill cuts stamp duty land tax for first-time buyers and other homeowners to reduce the upfront cost of moving home. It is because we want to help people as quickly as possible that the rates are already in force, helping our constituents.

The provisions in the Bill apply only to purchases of residential property in England and Northern Ireland, as land transaction taxes have been devolved to Scotland and Wales.

The Bill contains two clauses. Clause 1 provides for the thresholds at which stamp duty land tax is due on residential property to be increased, with effect from 23 September 2022. That means the nil-rate threshold is being raised from £125,000 to £250,000. As a result of the change, 43% of transactions will pay no stamp duty whatever, boosting transactions and supporting the property market. For stamp duty land tax chargeable on leasehold transactions, the nil-rate threshold is also raised to £250,000. Because home ownership is a priority for the Government, the clause also amends the nil-rate threshold for first-time buyers, which increases from £300,000 to £425,000. First-time buyers will not pay a penny of stamp duty land tax on properties under £425,000. The clause will also increase the maximum purchase value for which a first-time buyer can claim relief from £500,000 to £625,000. The changes mean that over 98% of first-time buyers in several regions will pay no stamp duty land tax whatever in several regions, including the north-east, Yorkshire and the Humber, the north-west, the east midlands and Northern Ireland. Over 60% of all purchases, including home movers in the north-east, will pay no stamp duty at all. Clause 2 simply names the Bill the Stamp Duty Land Tax (Reduction) Bill.

Government amendments 1 to 13 end the provisions in clause 1 on 31 March 2025, as announced to the House by the Chancellor on 17 November at autumn statement. As I said, the Chancellor has been very clear that the Government are committed to stability and fiscal responsibility. It is right that the provisions in the Bill remain in place over the next two years to help support the hundreds of thousands of jobs and businesses reliant on the property market during a difficult economic period. But as part of our commitment to getting debt falling in the medium term, the amendment will end the changes on 31 March 2025. From 1 April 2025, the thresholds will revert to their previous levels. Government amendment 12 includes transitional rules to support people who have substantially performed their purchase before the end of the temporary relief, but who complete after the 31 March 2025 end date.

Government amendments 13 and 14 amend clause 2 to rename the Bill the Stamp Duty Land Tax (Temporary Relief) Bill to reflect the sunset clause that will now end on 31 March 2025. The Bill comes into force on Royal Assent, but applies in relation to transactions with an effective date on or after 23 September 2022 until 31 March 2025. As a result of the resolution passed by the House of Commons under the Provisional Collection of Taxes Act 1968, the Bill’s provisions have been in force since 23 September 2022. Our constituents who have bought a home in the last few months have had the benefit of those reductions. We very much look forward to supporting homeowners, including first-time buyers, in the coming two years with the Bill.

Sir Roger, it is a pleasure to serve under your chairmanship.

The Government’s proposal in the Bill will do some marginal good, reducing the cost of buying for some people. The danger is that it meets the needs of a very small number of people. The overwhelming majority of people living in my constituency who cannot afford a home are not in the waiting room, shall we say, to be able to access a new home on the basis of this change. If we think, for example, that £250,000 constitutes the price of an affordable home, we are not in touch with reality—certainly not in the Lake district and the rest of Cumbria. I do not propose to vote against the Government’s proposal, because I can see how it could do some good at the margins, but if we were really bothered about the fact that most people cannot afford to be a first-time buyer with a home of their own, we would be tackling the lack of development of new council homes, social rented homes across the board and shared ownership, and we would be looking at making better use of the current stock.

The reality is that whatever benefit the stamp duty cut might have brought to families has already been quashed and exceeded by the additional cost they will have to bear through mortgage interest rate increases resulting from the Government’s failures. I am told that in the financial markets, those who are in the know refer to the increased mortgage costs, which dwarf any benefit that the stamp duty may bring to new homeowners, as the moron premium—I promise you that those are not my words, Sir Roger. That is the consequence of a very foolish decision that this Government made just a few months ago.

That is not to say that there is no benefit in what the Government are choosing to do. However, my new clause 3, which—with your permission, Sir Roger—I shall move today, would give the Government the opportunity to recognise that there are unintended consequences. We know that because they have already happened. We all remember that in July 2020, when the current Prime Minister was Chancellor of the Exchequer, there was a stamp duty holiday for purchasers of properties of a value of up to £500,000. The impact on the Lake district was instant and catastrophic: 80% of all new house sales in our community were in the second home market. Some 84% of properties in Elterwater, and more than 50% of properties in Coniston, are not lived in. Communities that were already on the margins might have lost enough full-time occupants that they cannot sustain a local school, post office or bus route or have any community life whatever.

There have also been consequences for our workforce. We are all rightly focused on the impact of the massive pressures on our health and social care services; in the lakes, they are under even more pressure because the homes that care workers and health workers once lived in are no longer available to them. That possibility has been wiped out, partly because of a well-intended but poorly informed decision that the current Prime Minister made as Chancellor in July 2020. We have learned that lesson, so there is no excuse for the Government to act without thinking about the unintended consequences and making some attempt to mitigate them.

I agree fully about areas of high housing pressure where people in local communities cannot buy their own home. May I commend to the hon. Gentleman what we have done in Wales? The Welsh Government have brought in a land transaction tax to replace stamp duty, which is a devolved matter, as the Minister said. Under that system, anybody who buys a second or third home pays a premium on that tax, which comes out of the first property as a disincentive to buying more than one home. Furthermore, in areas of high housing pressure, local councils can choose to treble council tax; indeed, my county council, Carmarthenshire, has announced that it will double council tax on second homes.

Yes. Most of our good ideas were somebody else’s first, so there is no harm whatever in looking at what devolved Administrations such as the Welsh Senedd Government have done. There are positives there from which we could learn, but it is also good to learn from our own mistakes—and the Government made a well-intentioned mistake two and a half years ago, with a very damaging impact on the lakes, on many other rural parts of England and across the United Kingdom.

Let me ram home what that means. It robs us of the life of our communities and the services on which we rely, but it also robs us of a workforce. That means fewer people working not only in social care or health, but in our hospitality and tourism industry. The lakes are the second biggest visitor destination in the country, with 20 million visitors a year, but with a very small population. The workforce that services all the folks here and the many others who holiday in the lakes have nowhere to live any more. We are in the terrible situation of facing a recession nationally but, bizarrely, having more tourist demand in the lakes than we can meet. We cannot meet that demand because we do not have the workforce, and one reason is that the Government have been negligent in providing and ensuring enough affordable homes for people in our communities.

I support the Opposition amendments that would ensure that the stamp duty cut is not available for the purposes of buying a second home; I think that is wise. My new clause 3 would place a responsibility on the Secretary of State to look every year at the policy’s impact on the number of second homes bought, not just in communities like mine but across the country.

The Government know what is happening. The evidence is before their eyes: their temporary stamp duty cut in 2020, a well-intentioned attempt to boost the economy at the beginning of the pandemic, had the immediately negative consequence of hollowing out communities in my area in Cumbria and in Northumberland, the west country and other parts of the UK. I am not theorising; it has already happened. My communities were badly hit by a well-intentioned but foolish Government policy. Why would the Government not accept new clause 3, which would allow them to do something about a policy that is positive on the whole, but that they know has a negative consequence on communities such as mine?

We will not vote against the Bill. We recognise that it does some good, although we think it is a bad use of public money. We could do so much more with that money by investing it in affordable homes for local families, ensuring more council homes and making sure that we tackle inequalities in rural communities in particular. We reckon that there is a marginal benefit from the Government’s policy, but there is a disbenefit for communities such as mine. Will the Minister take new clause 3 on board and agree simply to review the situation year on year, to prevent communities such as mine in the lakes, the dales and the rest of Cumbria from being hollowed out? Otherwise, they will be turned into ghost towns, their workforces will be eradicated and no young people will be able to set up a home there—all because of a decision with an unintended consequence of which the Government cannot now claim to be unaware.

Order. The shadow Minister may be slightly perplexed as to why I did not call her first, but the hon. Member for Westmorland and Lonsdale (Tim Farron) had indicated to me that he wished to press new clause 3 to a Division, so I thought it might be helpful for her to hear his arguments before being called to speak.

Thank you, Sir Roger. It is a pleasure to serve under your chairship this afternoon. I was not perplexed at all.

When we debated the Bill on Second Reading in October, the stamp duty cut that it seeks to introduce was one of the last few measures to have survived from the Tories’ reckless mini-Budget in September. As we said at the time, we oppose the stamp duty cut because it would not be the right way to spend public money and would not be responsible. On the back of 13 years of economic stagnation, our economy has just suffered long-term damage from the Tories’ recklessness at the end of last year. We made it clear that spending £1.7 billion a year on the proposed stamp duty cut simply could not be justified.

In October, as hon. Members may remember, there was a last-minute flip-flop in parliamentary business. Four days before we were due to debate all stages of the Bill, the Leader of the House announced that we would debate only its Second Reading. No reason was given for that last-minute change to parliamentary business, so we speculated that the decision might have been intended to give the new Prime Minister and his Chancellor the chance to change their mind about these stamp duty changes. That is indeed what has happened.

Rather than reversing the stamp duty cut altogether, however, the Government’s amendments seek only to impose a time limit on it. Ministers could have used the breathing space since last October to do the right thing and scrap the stamp duty cut, but instead the Chancellor proposes only a partial U-turn. Government amendment 1 will amend clause 1, imposing a sunset date of 31 March 2025. The Government’s other amendments, which are consequential on that change, include an amendment to the name of the Bill.

The Opposition remain opposed to the stamp duty cut. Even if Government amendments 1 to 14 are agreed to, the Bill will still represent a failure by the Conservatives to spend money wisely.

We are not talking about a small amount of money: the Government’s own figures make the Bill’s price tag clear. Even if the stamp duty cut is time-limited, it will still cost taxpayers £3.2 billion. We are serious about spending public money wisely, and the Government should be as well. For that reason we will vote against the Bill on Third Reading even if it has been amended, but before we reach that stage we still want to use this Committee stage to interrogate the Government on some of the detail, and to urge them at least to amend its provisions if they are not willing to drop it entirely.

Clause 1(1) sets out the headline changes in stamp duty thresholds, while subsection (5) amends the specific thresholds for first-time buyers and the maximum amount that they can pay for a house and still be eligible for relief. We believe it is crucial to help first-time buyers get a foot on the property ladder, and that is something that the Minister mentioned very recently, but we have to say that after 13 years of Tory government during which home ownership rates have fallen, first-time buyers need more than a stamp duty cut to be given any hope of being able to buy their homes.

However, it is not just Labour Members who are saying that. The head of residential research at Savills, the estate agent, was quoted in the Financial Times as saying, on the day of the autumn statement, that higher borrowing costs were likely to overshadow any impact of the tweaking of stamp duty thresholds. We accept that the interest rate on the average two-year fixed-rate mortgage has risen from 2.3% in December 2021 to 5.75% a year later, but any savings from the stamp duty cut pale into significance in comparison with the higher mortgage bills that people will face for years to come as a result of the Conservatives’ economic recklessness.

The truth is that a stamp duty cut seems to be all the Conservatives have to offer first-time buyers, beyond bad news about mortgage rates. In fact, even that stamp duty cut will not benefit swathes of people across the country: an analysis carried out by the Resolution Foundation has shown that the Bill’s changes to first-time buyer’s relief will be of no benefit to the average first-time buyer outside London and the south-east. However, while many first-time buyers will see no saving from the stamp duty changes, clause 1(3), which increases the threshold for people buying second and additional homes, will ensure that second home buyers, or landlords buying additional properties, will receive a tax cut of up to £2,500 on each transaction.

Surely that is the part of the Bill that Ministers must struggle hardest to defend. Even if the Government are determined to retain stamp duty cuts overall, surely they can see that a cut targeted at second home buyers is not the way in which public money should be used. I therefore urge the Government at the very least to support our amendment (a) to Government amendment 1, along with amendment 15, which would prevent a tax cut from applying to buyers of second and additional homes.

The hon. Lady seems to be obsessed with the issue of second homes. What about the point she made earlier about the number of young people becoming home owners, which has declined so dramatically since 1987? In 1989, 51% of 25 to 34-year-olds owned a home; now about half that number do so. What are the Opposition going to do about it?

In fact, the statistics quoted by the hon. Member show that the Bill will not help people. It will not help first-time buyers, and it is not just Labour Members who are saying that: the Resolution Foundation has provided statistical evidence that it will not help them. We want to help first-time buyers as well, but this is not the right solution. It will be mainly second and additional homes that benefit. Our two amendments would amend Government amendment 1 to remove the relief for buyers of additional dwellings, and would remove clause 1 (3), which raises the threshold for them. They would prevent the Bill from giving relief from stamp duty to buyers of second homes. I hope the hon. Member will support our proposals, particularly our amendment to enable first-time buyers to get on to the ladder as he wishes them to do.

As I have made clear, we do not believe that this stamp duty cut is the right or responsible way in which to spend £3.2 billion of public money, but if the Government are not willing to cancel the cut altogether, I urge Conservative Members at the very least to support our amendment to prevent second home buyers from receiving a £2,500 tax cut.

New clause 1, which Labour has also tabled, requires the Chancellor to be up front and transparent about the costs of the partial U-turn on the stamp duty cut, and to set out the measures that the Government will take to mitigate the impact of the abrupt end of the stamp duty relief at the end of March 2025. We know from the Government’s policy paper on this tax change that His Majesty’s Revenue and Customs will have to incur costs in the region of £300,000 to change IT systems, and about £2.4 million in extra staff costs. That is ridiculous. Through new clause 1, we aim to push Ministers further by asking them to set out specifically the costs of implementing their U-turn

“for the Government, the property industry, and homebuyers”,

as well as

“any wider costs and impacts of the change…on the housing market”.

We are also asking them to set out the measures they are

“planning to ease the impact on tax revenues, home purchases and the housing market of the reduction in stamp duty…coming to an abrupt end on 31 March 2025.”

We know from Government amendment 12 that Ministers are introducing measures to ensure that transitions that straddle the end of the temporary relief benefit from the reduction, but the question of the impact of ending the stamp duty relief goes much further than that. In 2016, the Office for Budget Responsibility published a paper on property tax changes and forestalling when transactions are brought forward to benefit from lower tax rates. The OBR found that in each historic case that was analysed, the preannouncement of an upcoming tax increase led to a sizeable forestalling. Forestalling is therefore expected to be an important issue in relation to the end of the temporary stamp duty cut, and we urge the Government to set out the measures they are planning ahead of that. If they are not willing to accept our new clause 1, I urge the Minister to set out the detail that we request, either at the end of the debate or subsequently in writing.

When our country is suffering the consequences of 13 years of low growth and of the Conservatives’ economic chaos at the end of last year, now is not the time to be spending £3.2 billion on this tax cut, particularly when hundreds of millions of pounds will go to the buyers of second homes. We urge Members in all parts of the Committee to support our amendments to remove the tax cut for second-home buyers, and to join us in opposing the Bill on Third Reading.

I think that the Government have made a number of admissions today about the importance of property taxes, and stamp duty land tax in particular. During the covid period we used a reduction to try to stimulate the market and keep it afloat, for good reasons. I heard what was said by the hon. Member for Westmorland and Lonsdale (Tim Farron). There are often flipsides, downsides and unintended consequences from tax changes, but the implicit admission from the Minister was that lower stamp duty encourages market transactions. In my mind that has to be a good thing, because property sales refresh housing stock. I imagine that the first thing any of us who are lucky enough to own a property will do when we purchase it is to do stuff. We might improve the bathrooms—or whatever we fancy, if pockets are deep enough—but those transactions that we make with local builders and others add to the local market. They add jobs, and there are VAT revenues and profits for B&Q and elsewhere. This all comes with it.

A trap that the Liberal Democrats and the Opposition Front Bench fall into is that they do not see tax as a game of chess. Too often we—the Treasury included—see tax as a one-step move: if we do this, it will create just that. It is far more complicated than that, because there are other outcomes in terms of economic activity that are not always recognised. But the strict admission by the Government Front Bench today is that lower stamp duty makes the wheels turn, and that has to be to the good.

We are currently seeing a modest reduction in house prices, so this type of measure to reduce stamp duty is very much to be welcomed, but I have a rather more long-standing objection to SDLT and to this form of capital tax generally, but most particularly to SDLT, because it stops labour mobility. If one of my constituents, someone with a family, were offered a job elsewhere in the country, the most natural thing would be to sell their property and move to that new area. But when they are faced with a stiff bill for SDLT, they have to be doubly or triply sure that this is the right move, because it is likely to cost tens of thousands of pounds. It worries me that people are not taking up roles elsewhere because they need to be absolutely sure. What probably happens is that they take a rental property elsewhere to get a feel for the area and find out whether the job is right. That is not helpful for their family life in the longer term.

The Government Front-Bench team made another admission this afternoon. Not surprisingly, the Minister announced with great fanfare the very good news that in vast areas of the country, the majority of transactions will fall outside of stamp duty. That is particularly true for those buying a property for the first time. We often talk about tax, and people’s idea of fairness will probably be different depending on where they sit in this House, but can it really be fair that a constituent in South Thanet who is trying to purchase a modest property will face this SDLT charge just because they are in Kent in the south-east, whereas someone buying the self-same kind of property in another part of the country will not pay that tax at all? I am not entirely sure of the fairness of that. I would rather that everyone paid a similar amount in a property transaction, possibly based on the size of the property.

Another area that I have discussed with many colleagues over the years, including at a few roundtables, is retirement mobility. Too often, people who have lost their partner, a husband or wife, are stuck in their old property. We are very much aware of the cost of heating that type of property. They do not have the ability to do more work to increase their annual income, and they are stuck in a property that is too big for them, with all those memories of old. They realise that they really ought to move somewhere smaller that is more energy efficient and closer to services. However, if they live in an area of the country that is expensive, they might find an ideal property that is smaller and has all those good things, but there will be a very big SDLT charge.

I know the thoughts of older people, because I have had these discussions with my father and friends, and when they look at the potential bill just for doing the right thing through retirement mobility, they often say, “Do you know what, I’m not prepared to pay it. I’m just not going to pay £10,000 or £20,000 or whatever the price may be to do the right thing.” They do not want to pay that much to move somewhere more appropriate for older living.

I implore the Minister to receive a document from me and to have a conversation about the concept of a downsizing relief for older people. It could be fixed to retirement age, when people’s ability to earn has gone because they have retired. Perhaps they could get some credit, such as free stamp duty, for doing the right thing in moving to a smaller home, which is sensible for them, the family and everyone else. In so doing, they would be releasing those bigger homes for the families who need them.

We have heard this afternoon about people’s concerns over second home ownership, and I get that. This party has actually done a lot in that direction—for good, bad or indifferent reasons. That includes the 3% surcharge on second property purchases, but we have also restricted mortgage interest relief for those with buy-to-let properties. I made a speech in opposition to that, back in 2016, because I was unhappy with what George Osborne said at the time. It seemed to break the whole spirit of a cost being applicable against a profit, no matter what enterprise one does. It would be wrong for the Opposition to say that we have done nothing to discourage buy-to-let and second home ownership, because we most certainly have acted. I think we have done more was ever done through the Labour years.

I would encourage people who are second home owners to sell. I want to see people buying their first properties. In areas such as mine in South Thanet—I know colleagues in the west country face similar problems, as does the hon. Member for Westmorland and Lonsdale—the holiday homes are often, by their very nature, smaller. Those who look at my entry in the Register of Members’ Financial Interests will see that I am a chartered accountant and a chartered tax adviser. A number of people who have become widows and widowers have come through the door over the years and said, “I really ought to sell my second property on the coast.” I have to tell them, “You can’t do it, because you will face a huge capital gains tax charge. Sadly, your only option is to sit on it until you die and leave it to your family.”

I reckon that there are hundreds of thousands of such properties of the right size and in the right place that are unused because of the CGT blockage. To unwind that would be the sensible thing to do. It would prevent some of the threats to our green spaces, because these are effectively brownfield properties. They are unused and often unloved, with an avocado suite that could benefit from being uplifted, but that is not being done because these properties are candied in aspic. I want them to be released to the market for those first-time buyers, and I hope that we are able to have that discussion.

Politically, the Opposition will say that this proposal will benefit second home owners who are cashing in on a second property, but we need to get beyond that. We need those smaller properties in the right places to be put on the market for first-time buyers so that we can have communities that are active and working in Thanet, the west country and the lakes, rather than second home ownership and holiday homes where very little real community happens. I hope that that can be fed into the Treasury in advance of the next Budget.

Perhaps it is time for bold moves. Yes, congratulations on a reduction in stamp duty—although I would rather it were permanent—but I think there are greater considerations, particularly in relation to retirement downsizing, that ought to be discussed more widely.

I rise to speak to new clauses 4 and 6, which I tabled, and to support new clauses 2 and 3, which were tabled by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron).

The housing crisis has been discussed at length today and at many other times in this place, and Members are well aware of the pressure that second and luxury home ownership is placing on communities where existing residents are struggling to buy their first home. In rural parts of Britain, including North Shropshire, our villages are at risk of turning into retirement villages and our tourist hotspots are almost becoming ghost towns at certain times of the year. That is having a hugely negative impact on rural skills and the rural economy, as both pupils and people of working age are in increasingly short supply.

The economic climate has changed, but house prices in rural Britain have risen fast in recent years. Figures from Hamptons, the estate agent, reveal that rural house prices rose by 14.2% in 2021, compared with just 6.8% in urban areas. The property website Property Road estimates that there are 132,000 fewer young homeowners in rural England than in 2010. I do not want to bore the Committee with facts and figures, but eight in 10 respondents to a Country Land and Business Association survey said that the lack of affordable housing had priced out first-time buyers in rural areas.

Although efforts to help first-time buyers in all areas of the country are welcome, the experience of the previous temporary stamp duty reduction in 2020 suggests that there is a risk of distorting the market and achieving the opposite. During that period, rural areas saw soaring house prices, with those trying to sell in Shropshire reporting intense competition and competitive bidding, unseen, for their home. That is all very well for those who were trying to sell, but it was bad news for anyone trying to buy a home at the same time and disastrous for anyone trying to get a foothold on the housing ladder.

Meanwhile, genuinely affordable housing—housing costing less than £250,000—remains in desperately short supply. Market prices have risen so much in recent years that it is putting intense pressure on social housing and the private rented sector, with social housing waiting lists spiralling and thousands of families being forced into temporary bed-and-breakfast accommodation. We all know this is far from ideal for anyone who needs a place to call home, but it is totally unsuitable for families whose children need the security of a stable school and home environment. People who came here under the Ukrainian and Afghan refugee schemes, and whose family sponsorship has come to an end, are now the responsibility of their local authority, and they are also being forced to spend time in unsuitable temporary accommodation.

The potential for an accidental house price distortion makes it much harder for local authorities and housing associations to replace stock sold under the right to buy, because they are unable to retain 100% of the proceeds. I tabled new clause 6 to require the Treasury to consider the impact of these measures on the housing market, and specifically on the availability of private rented and affordable housing, because people who are priced out of those sectors are adding to the ever-increasing waiting lists for social housing.

New clause 4 would require specific consideration of the housing market in rural areas in response to the recent trend of house price growth in these areas outpacing the house price growth in urban areas, which is exacerbating the issues we have seen across the country. We simply cannot ignore the housing crisis any longer. All policy should consider the possibility of unintended consequences and mitigate that risk. These reports would better inform policy, and I urge the Minister to consider their inclusion so that we do not cause an unintended problem.

I briefly turn to second homes, although I cannot improve on the points made by my hon. Friend the Member for Westmorland and Lonsdale. Suffice it to say that second home ownership is hollowing out villages in some parts of the country on weekdays and during the winter, and it is driving up house prices for everyone, meaning that many people cannot afford a first home. In a country with a housing shortage, the Government should strongly discourage empty second homes. The hon. Member for South Thanet (Craig Mackinlay) made an excellent point on that issue.

I support new clauses 2 and 3, which would require the Chancellor to consider the impact of the Bill on the number of first and second home buyers, such that it can be amended if necessary, and specifically to consider the worst-affected areas, which are our national parks and areas of outstanding natural beauty.

I broadly support any measure that encourages home ownership, but I fear that this temporary cut in duty, at a time when the Treasury can ill afford it, will be counterproductive for first-time buyers, particularly in rural Britain. New clauses 4 and 6 would allow the impacts to be fully understood, to confirm whether I am right and to make sure the policy is well informed.

Happy new year, Sir Roger.

In speaking to my amendment (b) to amendment 1 and my new clause 7, I share with the Committee my dismay at the way in which the Government, with their amendments, are transforming this Bill, which originally introduced a permanent tax reduction. The Bill will now increase tax permanently by about £1 billion a year from April 2025.

On 17 October, the new Chancellor confirmed that the mini-Budget’s provisions on stamp duty land tax were safe, yet in his autumn statement, one month later, he announced:

“I will sunset the measure”.—[Official Report, 17 November 2022; Vol. 722, c. 846.]

That is an extraordinary use of language, because it does not fit the definition of a sunset clause set out on the UK Parliament website:

“A provision in a Bill that gives it an expiry date once it is passed into law. Sunset clauses are included in legislation when it is felt that Parliament should have the chance to decide on its merits again after a fixed period.”

I assumed, wrongly, that by introducing a sunset clause, the Government would give this House an opportunity to reconsider the situation before the advent of that sunset period.

That is why I tabled new clause 7, which states:

“The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.”

That would meet the concerns raised by the hon. Members for Westmorland and Lonsdale (Tim Farron) and for North Shropshire (Helen Morgan). New clause 7 continues:

“(2) This assessment must include an assessment of the impacts on—

(a) the volume and value of housing transactions on the housing market,

(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and

(c) tax revenues.

(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”New clause 7 would be a proper sunset provision that enables this House to return to the issue before the change is made permanent, but the Government amendments do not embrace that at all.

How does this Bill fit with what the Prime Minister said on 4 January? In quite a long speech, his only reference to taxation was:

“as soon as we can, the Government will reduce the burden of taxation on working people.”

Today, six days after that speech, the Government are asking us to increase the burden of tax on working people with effect from April 2025.

We have also heard in the interim that the Government will forgo the receipt of about £1 billion from the sale of Channel 4, yet as recently as 18 July 2022, when responding to the consultation on that issue, the Government announced that now is the right time to pursue a change in ownership of Channel 4. Why, one might ask, is now the right time both to increase taxes and to abandon asset sales?

Stamp duty land tax is targeted at homeowners and those who aspire to home ownership. Like my hon. Friend the Member for South Thanet (Craig Mackinlay), I am opposed to stamp duty land tax because it is arbitrary, clunky and unfair in how it applies in different parts of our country.

For example, if someone lives in Christchurch and the average price of a house is £405,000, that does not mean that they are better off. It means they have to spend more money on the borrowing costs in order to buy an average house for themselves and their family. Someone living in the Minister’s constituency, where the average house price is only £200,000, would have lower borrowing costs and would not have to pay any stamp duty land tax.

This is precisely why the Government are so committed to levelling up. Although I know how beautiful my hon. Friend’s constituency is, having had the pleasure of visiting it, in my beautiful corner of England, we do not, sadly, have the transport links that other constituencies have. It is precisely this drive for levelling up, which I know Conservative Members are united on, which may help with some of the issues he sets out so eloquently.

I am grateful to the Minister for that intervention. It comes down to how we define, “levelling up”. The point I am trying to make is that, if somebody is buying an average house in Christchurch, or in her constituency of Louth and Horncastle, it should not make any difference in terms of taxation whether the house is going to cost £405,000 or £200,000. Why should the person buying a house in Christchurch who wants to become a teacher or an NHS employee in the area not only have the burden of having the higher house price—she has referred to some of those issues—but have to pay £10,000 in SDLT for the privilege of moving into the Christchurch constituency to purchase an average-priced house? I do not see any justice in that at all. In levelling up, we should be putting those two categories of person on the same level when it comes to their liability for paying transaction taxes.

My hon. Friend the Member for South Thanet made the suggestion, which I have also made, that we should scrap SDLT. If we want to have a transaction tax, we should introduce one based on, for example, the size of a property, because that would be neutral; it would really be levelling up across the country. Obviously, it would be more popular with some people than with others, but it would certainly be very popular with my constituents and it would meet the criterion of levelling up.

It might be very popular in Christchurch, but it would be very unpopular in Wellingborough and it seems totally unfair to me.

This is the challenge, because some people think that this would adversely affect them. When we were looking at whether we should change the domestic rating system, we always faced the problem of the people who were going to be worse off, who were always the losers and who were going to complain. I accept that, were this to be implemented in the way I am canvassing, it would create some losers who would be unpleasantly surprised. That leads me to my belief that SDLT and stamp duty should be abolished altogether. [Hon. Members: “Hear, hear.”] That is an issue on which we, as real Conservatives who believe in a homeowning democracy, should be able to agree—and it seems from that response that we can agree on it—rather than dividing again in trying to find an alternative to an already unsatisfactory tax.

Let us remind ourselves that, in the 1980s, when we had the beginnings of the property-owning democracy revolution, with more than 50% of people in the 25 to 34 age group being homeowners, we had a stamp duty regime where the maximum rate to purchase any house was 1%. Since this process started under the Blair Government and continued with the coalition—the Treasury is always seeing this as a cow to be milked for taxpayers’ benefit—the proportion of people able to afford to buy their homes has declined significantly. So the challenge I make to the Government, and I hope the Minister can respond to this, is: if we put stamp duty back to 1% as a maximum, what would that do to increase the number of transactions in the housing market, which, as others have said, is ostensibly the Government’s agenda?

On 23 September, HMRC’s policy paper “Stamp Duty Land Tax Reduction” set out the following policy objective:

“This measure is part of government’s commitment to support homeownership and promote mobility in the housing market, in turn supporting economic growth. Increased property transactions also add to residential investment and spending on durable goods.”

Unfortunately, that was withdrawn on 28 November. It would be interesting to know whether that policy objective has been retained by the Government even though the HMRC policy paper has been withdrawn. Another paper issued on 23 September was “The Growth Plan 2022”, which I thought was great, as did many of my constituents. Paragraph 3.30 of the plan stated that the changes to SDLT would

“take 200,000 homebuyers, including 60,000 first-time buyers, out of SDLT entirely.”

Today, however, we are discussing a proposal by the Government, by way of amendments to the Bill, that would put those 200,000 home buyers, 60,000 of them first-time buyers, back into SDLT. Do we really want to do that? Do we really think it will help to move the housing market, boost growth and help people to have the mobility to get to new jobs?

This is not just about people being able to move to a new job by moving house; we also need to think about the damage to the environment being done by the large number of people who are now, having no alternative, being forced to engage in long-distance commuting. Last week, I visited a school in my constituency. The teacher showing me around has been driving regularly from Wales to do a great teaching job in the Christchurch constituency. Fortunately, she is about to move into the constituency, but that is after many, many months of that long-distance commuting. That is highly undesirable. It is bad for the environment and bad for the people involved, because it means that they are sitting behind the wheel of a car for far too long during the working week.

Stamp duty land tax is targeted against homeowners and it will have an adverse effect on labour mobility. Yet the Prime Minister, in his speech on 4 January, was complaining—I agree with him on this—that a quarter of our country’s labour force is inactive and, in this Bill, he is introducing an additional tax on the very mobility that he should be espousing. As my hon. Friend the Member for South Thanet has said, SDLT is a tax on downsizing: it makes it much more difficult for anyone to receive a significant return by selling a larger house and purchasing a smaller one.

My biggest complaint, though, is that the provision hits hardest those for whom homeownership is least affordable. The latest figures, produced by the House of Commons Library in December, show that, in Christchurch, the average house price is now 11.8 times earnings. The national average in England and Wales of eight times is bad enough, but why are we imposing that extra burden on those buying houses in places such as Christchurch? The latest figures from the 2021 census show that the dream of a homeowning democracy espoused by generations of Conservative politicians since Margaret Thatcher, and first raised in 1975, is not one of this Government’s priorities.

I think it is very sad and embarrassing that His Majesty’s loyal Opposition should be crowing at that statement.

Just to clarify, I am not remotely crowing. I entirely agree with the hon. Gentleman. This Government have hugely failed on allowing people to buy their own homes. It is a national disgrace. I support what he is saying; I am not remotely crowing.

I accept that I used the wrong expression in suggesting that the hon. Gentleman was crowing. But may I set out the basis on which I have these concerns? In the Prime Minister’s speech on 4 January, there was not one mention of the word “housing”, let alone any mention of the expression “home ownership”. Why is that? We obviously have a real crisis in housing and home ownership on our hands. We are facing a potential fall in house prices this year—predicted by Oxford Economics to be about 12%, but who knows? Having stamp duty land tax, even at temporarily reduced levels, will mean that the burden of the reduction in house prices will be borne by those people trying to sell to a greater extent than would otherwise be necessary, because potential purchasers will have to budget for making SDLT payments to the Government.

You can tell, Mr Evans, that I am very concerned about the Bill. When I see that the Prime Minister has declared that the people’s priorities are the Government’s priorities and that we will rebuild trust in politics through action, all I can say is that I do not believe that the new measures in the Bill accord with the people’s priorities because I think those priorities are for a permanent reduction in stamp duty land tax and even, potentially, the abolition of that tax, rather than reintroducing it at a higher level in 2025.

When I was talking earlier today to a member of the Government’s Treasury team, I was told that one reason why my amendment (b) could not be accepted by the Government was that it had not been cleared by the Office for Budget Responsibility. I ask rhetorically, “Who is in charge?” Are we really saying that the Office for Budget Responsibility is able to forecast things to the extent of £1 billion here or £1 billion there? I do not think it can, and if that is the best that the Government can do in arguing against amendment (b), I hope they will think again about whether to accept it.

We cannot carry on as we are now, where the average age of a first-time buyer is now 34 and the average house costs 5.5 times the earnings of a first-time buyer; 25 years ago, it cost only 2.1 times as much. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) on the Opposition Front Bench referred repeatedly to the Resolution Foundation reports on these issues, which draw our attention to the fact that young people are unable to get on to the housing ladder. The reports introduced quite an interesting statistic for me: 1.3 million young people who would have owned a home in 1989 are not able to own one today.

I do not know whether those 1.3 million young people would be more likely to vote Conservative if they were homeowners, but I suspect they probably would, and I think that is one reason the pressures against home ownership, which were begun very softly by the Blair Government, are still pursued by the Opposition parties. That is also why, instead of facing up to the need to address stamp duty land tax, the Opposition are now trying to divert attention on to those who own second homes.

On the question of second home owners, let us think about families. At the moment, if a husband and wife are married with children and they buy a second home, they are already penalised. If two adults are in a relationship with each other, but each one has a separate house that they occupy individually, and they then share at weekends or perhaps during the week, so that they have two homes between two people, they would not be caught by any of the regulations relating to second homes.

Let us think about the law of unintended consequences. Do we really want to introduce even more regulation that will probably have the perverse consequence of making more young people say, “Why should we to get married? As soon as we do, instead of being able to have two homes as we currently can, we will only be able to have one.”

On that point I will close my remarks. This Bill presents a great opportunity to debate a such big issue; I hope the Government, if they are as radical as they say they are, will come forward with some proposals to abolish stamp duty land tax. I think that would be a very popular manifesto commitment.

When this Bill was previously before the House, on 24 October last year—indeed, on the day we last changed Prime Minister, so it was under a different Treasury Minister—I asked the Treasury to analyse the potential harms caused by excessive second home ownership and holiday lets. I thank the Minister for her ongoing engagement on this issue, as well as the rest of the Treasury team. I have spoken to them on numerous occasions about the many complex taxation issues causing an imbalance in our housing market in constituencies such as mine, which I hope we can take steps to address in the coming months.

We know that when stamp duty was last reduced post pandemic, it generated a surge in short-term holiday lets and second home purchases. Indeed, 25% of purchases in my North Devon constituency during that period attracted the higher rate of stamp duty as an additional dwelling. However, we have no information on what proportion might have been long-term buy-to-let landlords. Alongside the many challenges in our North Devon housing market, we have seen a 67% decline in private rentals, with a surge in section 21s enabling landlords to take advantage of the tax inequalities between long and short-term rentals.

We desperately need to find a way to encourage buy-to-let landlords. The complexity of paying the 3% levy for an additional dwelling is, in many ways, a distraction from a Bill designed to help first-time buyers in particular on to the housing ladder. The removal of stamp duty saves thousands for anyone buying their first home—up to £425,000 at this time. When the numbers are fully analysed, in this legislation the maximum benefit to somebody buying an additional dwelling is just £2,500. We need to be just a bit realistic about whether that will be a large enough sum to motivate a change in behaviour in people who are buying additional properties—their second, third or fourth home.

For more than two years now, I have stood up in this House and asked for steps to be taken to tackle the housing crisis in North Devon. The Levelling-up and Regeneration Bill has now been amended to reflect the concerns of constituencies such as mine. Indeed, it is good to see Conservative-run councils in Devon and Cornwall taking steps to adopt measures in that Bill to double council tax on second homeowners. It is disappointing that Lib Dem-run North Devon Council has not taken such steps, but I remain optimistic that it will.

I very much hope that the paper I have submitted to the Treasury on behalf of Conservative colleagues—it includes many suggested changes to the tax system to tackle the imbalances between long and short-term rentals, and to continue making it easier for local families to buy and rent in places where they grew up or where there are huge numbers of job vacancies for them—will pave the way to looking more closely into the matter. I hope that the Treasury team’s door will remain open to MPs to meet and tackle this issue.

May I place on the record my personal appreciation of the intensive work that my hon. Friend has put into this issue on behalf of her constituents and the wider south-west? Many south-western MPs are concerned about this issue, including—dare I say it—hon. Members from the Whips Office, who cannot stand up and speak. I am extremely alive to the issues that she raises. I wonder whether she would do me the favour of coming to see me at the Treasury over the coming months so that we can discuss further the issues in her constituency and the interesting ideas she has put forward.

Nothing would give me more pleasure than to go back and speak with the Minister about these matters. We all worry about why the NHS is struggling to recruit. I can quite definitively tell people here today that the public sector struggles to recruit in North Devon because of the housing crisis.

We on the Conservative Benches are keen to tackle this issue. Yesterday’s cross-party drop-in session was hugely helpful. We heard from the officials behind the legislation, as well as from the Minister. It is just a shame that Opposition Members did not turn up—not one of them. They have tabled a number of amendments to the Bill, but do we really need to put reviews into legislation? One cannot help but wonder whether such amendments are politically motivated rather than aimed at delivering real change to constituencies that urgently need their housing markets to be rebalanced.

It is an honour and a delight to follow my hon. Friends the Members for North Devon (Selaine Saxby) and for Christchurch (Sir Christopher Chope). May I say at the outset that I completely agree with my hon. Friend the Member for Christchurch that you should be Sir Nigel, Mr Evans? If I call you Sir Nigel, will I have as much time to speak as my hon. Friend?

It is a pleasure to speak because, as the chair of the Back-Bench Treasury committee, I have done a lot of work on stamp duty policy, and I have had a slightly perverse interest in stamp duty for the last decade or so and written various policy papers and research reports on it. We all support raising the level of home ownership. In fact, rates of home ownership started to decline under the previous Labour Government. There is a home ownership gap of about 5 million people who want to own their own home but cannot. I will support all measures—well, pretty much all measures—to increase home ownership. Clearly, we are teetering on the brink of recession and need to promote economic growth, so I very strongly support the broad thrust of the Bill in cutting stamp duty to help people get on to and up the property ladder and to stimulate economic growth. I have some reservations about the proposal being temporary and about it applying to second properties.

I will address some of the key themes of stamp duty policy. We have heard various calls today—not least from my hon. Friend the Member for Christchurch—to abolish stamp duty outright, and in fact, I have called for that before. But it is not just Conservative MPs who think that stamp duty should be abolished outright; the Institute for Fiscal Studies, on whose advisory council I sit, talked in its magisterial work on taxation policy—the Mirrlees review—about all the damage of stamp duty and called for it to be abolished.

Lord Macpherson, a former permanent secretary at the Treasury, gave evidence fairly recently to the Treasury Committee, on which I sit, about tax policy. He highlighted all the damage that stamp duty did to the economy, for many of the reasons that my hon. Friends the Members for Christchurch and for South Thanet (Craig Mackinlay) set out earlier. Lord Macpherson certainly would not be sad to see its demise.

I want to raise a slightly more nuanced point than the outright abolition of stamp duty, which would lead to a big problem with revenue, as it raised £14 billion last year in total—about £4 billion for commercial property and £10 billion for residential. That would be a hole. My more nuanced argument is that people buying houses to live in are overtaxed, but people buying properties either as second homes or for investment are undertaxed. Exactly 10 years ago, in 2013, I wrote a paper arguing for a higher rate of stamp duty for people who are buying homes not to live in. Fundamentally, homes are for living in. Two years later, the Government introduced that policy. It is now the additional premium. I do not think the Government introduced it in the right way and there are all sorts of problems with it, but I will not go into detail on that now. The stamp duty regime at least recognises the difference between people buying properties for investment or as second homes as opposed to people buying properties to live in as their homes. That tilts the property market in favour of those buying homes to live in, which is welcome.

I apologise for intervening on the hon. Gentleman in his good, interesting speech. He said that it is possible for stamp duty purposes to distinguish between a second home and a first home. That means it would clearly be possible to distinguish between second homes and first homes for planning purposes, which would give local authorities the power to ensure that they protect a minimum number of homes for local families. I gave the Government the opportunity just before Christmas to vote for an amendment to do that—why does he think they did not do so?

I thank the hon. Member for that intervention. I must admit I do not know the reasons behind that, but it clearly is possible, at least from a taxation point of view, to distinguish between homes for investment and homes for living in. From a planning point of view, there are probably other considerations.

There may be many reasons.

The capital gains tax regime already distinguishes between homes for investment purposes and homes for living in. People do not pay capital gains tax on the home they live in, but if they do not live in it, they do pay. The reason that people buying homes are overtaxed has been laid out by many colleagues, so I will not overlay that, but clearly we need labour mobility and for people to be able to live in appropriate housing. If we overtax housing, we end up with lots of people living in inappropriate houses, not least the home hoarders at the end of their working lives and the empty nesters whose kids have gone and who live in too big a house and do not want to move. That has a damaging impact on labour mobility, as people want to move around the country. It is the most economically damaging tax.

The reason I say that people buying second homes for whatever purpose or homes for investment are undertaxed is that stamp duty is a transaction tax. All other transaction taxes—we can argue about whether VAT or excise duty on petrol are transaction taxes—are flat-rated. People pay the same rate, whatever the value. We pay 20% VAT whether we are buying something for £10, £100 or £100,000. Stamp duty, however, is a progressive transaction tax, with a lower rate at the bottom end that progressively goes up, as it is designed now. That zero rate and lower rate for lower value properties is for social reasons. It is basically to help first-time buyers get on the property ladder, which is welcome, and to help people get up the property ladder. That is a valid social reason to have progressive stamp duty, but that reason does not apply to people buying second homes or investment properties. There is no reason to have a graduated stamp duty to help property investors get on to the property investment merry-go-round.

Does my hon. Friend also agree that somebody in Christchurch who is having to buy an average priced house at the cost of £405,000—as compared with someone in Louth and Horncastle, who can buy the same house for £200,000—should not be taxed double, in a sense, in addition to having to pay a higher mortgage?

I thank my hon. Friend for that intervention. He proposed earlier that stamp duty should be based on the area of the property; I have some reservations about that for economic efficiency reasons. One of the considerations of taxation should be the ability to pay. If someone is buying a house for £400,000, clearly they will be able to pay a bit more tax than if they were buying a house for £200,000. But if the Government follow my proposal to get rid of stamp duty on residential properties altogether as an objective, his constituents will not have to pay any stamp duty whatsoever. They will pay the same stamp duty as the people buying houses in Louth.

As I said before my hon. Friend’s intervention, for people buying residential houses and flats as second properties or investments, there is no reason for a graduated stamp duty. We should have a flat-rate stamp duty whatever the value of what they are buying, just as if they are buying a luxury yacht, a watch or a car. They pay a flat rate whatever the value.

There is an economic justification for treating the taxation of houses differently depending on their use that does not apply to other products: constrained supply. The greater the demand for cars, the more are produced—you just carry on building them. But although we are trying to build 300,000 a year, house supply is constrained. That forces us to think, what is the ultimate purpose of housing? It is homes for people to live in. Other purposes are secondary. That should be at the forefront of Government policy. If we could build as many houses as anyone would want to buy, all those arguments would fall away, but that is not the case.

The Government could do other things on second properties. The Centre for Policy Studies recently suggested—and the Treasury Committee accepted after consultation with colleagues—having a 1% annual tax on non-residential property owners who do not live in the UK. If they can buy properties here, they pay an annual tax for owning them. It is difficult to see the economic rationale for encouraging international investment in the UK property market. That is a whole other debate, but the arguments do not really stack up. We have an incredibly generous taxation regime for international investors in UK properties when compared with almost any other country, including the United States and most European countries. We could afford to be less generous.

Ultimately, the Chief Secretary to the Treasury and the Chancellor will wonder where all this money will come from. At the moment, out of the £10 billion of residential stamp duty a year, about half comes from the additional property tax—the 3% paid on second properties. They could increase that and decrease the amount of tax paid by people buying properties for homes. The Centre for Policy Studies and the think-tank Onward both made proposals on stamp duty reforms that were fiscally neutral. By ramping up the tax on second and investment properties and cutting away the tax on people buying homes to live in, we can basically scrap stamp duty for homebuyers in a fiscally neutral way for the Government. I urge the Treasury to look at those proposals.

The next point is on the Government’s methodology for assessing revenues from stamp duty. Again, there is a long debate to be had about how the Treasury assesses the revenues it gets from tax changes. On stamp duty, it looks at the impact on the number of transactions: as transactional tax increases, the number of transactions goes down. It takes that into account for stamp duty but does not consider the impact of those reduced transactions on other tax revenues for the Treasury, such as VAT.

People pay VAT on the estate agent fees, all the sofas, the building work and everything else that goes into home moving, which my hon. Friend the Member for Christchurch mentioned. That is a precisely known and calculable amount that could easily be fed into the calculations. I reckon that when someone buys a home, on average about half the tax paid is through stamp duty and half through VAT on all of the additional work that goes into home moving. If the Treasury and the Office for Budget Responsibility included that calculation, they would come to a very different decision about the optimal rate of stamp duty and make it far lower.

There are other order effects, such as the impact on the labour market. The Treasury hates to think about other order effects. I will not go into the detail, but it is far easier to calculate them with more certainty and reliability for stamp duty than it is for other taxes. It is a direct consequence of stamp duty as opposed to a generic economic growth effect.

The Treasury should do a review of stamp duty policy overall and how it calculates the revenues from stamp duty, because I do not think the current methodology stacks up. We would end up with a very different stamp duty policy overall that was more tailored to the Government’s objective of promoting economic growth while promoting home ownership.

On the amendments about reviews, I do not think it is the purpose of legislation generally to tell the Government to do reviews, which is what the Opposition spend an awful lot of time doing. If the Opposition want to get the Government to do things like reviews, they should win an election.

It is a pleasure to rise after the stirring final sentence of my hon. Friend the Member for South Cambridgeshire (Anthony Browne). I thank Members around the Chamber for a really interesting and constructive discussion that has sometimes veered, dare I say it, into almost a philosophical debate about the very existence of stamp duty, markets, supply and demand and principles of economics. It has been a fascinating debate, and I thank all Members, particularly my hon. Friends the Members for Christchurch (Sir Christopher Chope), for South Thanet (Craig Mackinlay) and for South Cambridgeshire, for putting forward their long-considered thinking on this particular tax. In the interests of frankness, I have to manage expectations and say at the Dispatch Box that we have no plans to abolish stamp duty land tax, precisely because it raises billions of pounds a year, but I suspect that will not stop my hon. Friends.

My hon. Friend the Member for Christchurch asked a specific question about a flat rate of 1%. I had hoped to be able to answer it in this debate, but I am not able to, so I undertake to write to him. He and others across the Committee raised the very important issue of housing supply. This affects affordability in all our constituencies, including areas that have popular tourist destinations such as the constituencies of the hon. Member for Westmorland and Lonsdale (Tim Farron) and my hon. Friend the Member for Christchurch, and also city centres. That is why, as part of our work over the last 12 years, since spring 2010 more than 800 households have been helped to purchase a home through Government-backed schemes including Help to Buy and the right to buy. We operate a range of relevant schemes that make home ownership more affordable, including the lifetime ISA, and those are important precisely for the reason that has been argued so cogently by Members: the housing market has at times raced ahead of local incomes and affordability.

Colleagues across the House raised the issue of building new properties, which has been a subject of debate when considering other pieces of legislation before the House. I hope Members will be pleased to hear that in 2019-20, almost 243,000 additional dwellings were delivered—that is a net figure—which was the highest in nearly 30 years, and the Government are on track to meet their commitment to deliver 1 million additional homes across this Parliament. Colleagues also raised the very important issue of the supply of new affordable housing, which is a priority for the Government. In the spending review of 2021, we 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, providing up to 180,000 new homes across England.

My hon. Friend the Member for South Thanet brought his expertise as a chartered accountant into the Chamber; he is on another matter of House business and apologises for not being able to be here now. He raised the issue of retirement downsizing. The point I will make—and I hope to repeat it to him in person—is that the measures set out in the Bill will also help those who are looking to downsize. If someone is moving from a property in, say, the second tranche of tax down to one that is zero-rated, they of course will be able to benefit from that. It will reduce the stamp duty charge for movers by up to £2,500.

My hon. Friend the Member for South Cambridgeshire came up with a great many ideas, which I know he will continue to raise with me through his chairmanship of the Conservative Back-Bench Treasury committee. I take his point about other taxes being involved in the average purchase of a home, such as, we hope, when people are able to buy furniture and make the changes we all want to make when we purchase our next home. I hope that measures such as the energy-saving materials VAT exemption will help in some of those instances. However, I appreciate his point about the lever that stamp duty can apply.

Before I move on to the Opposition amendment, I want to reiterate that the Bill as it stands will mean that 43% of transactions—our constituents buying their homes—will not involve stamp duty. It will also mean that 98% of first-time buyers in several regions will pay no stamp duty. Again, I hope that addresses some of the issues raised.

The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) urges us to support Opposition amendment (a). To put it into context, there were about 1,025,000 residential transactions in the year 2020-21, of which around 237,000 related to additional property transactions, which includes not just second homes but buy-to-let properties. I will come in a moment to the significance of the rental market in this debate. As my hon. Friend the Member for North Devon (Selaine Saxby) set out so starkly, there are real issues in the housing and rental markets in particular parts of the country, and we want a national tax to help across England and Northern Ireland.

The Opposition amendment would remove purchases of additional property from the scope of the Bill and the temporary cut to stamp duty land tax, which we argue would have an impact on rental supply and, in turn, tenants. Through the 3% surcharge in the Bill, we are ensuring that those who purchase additional homes—in other words, both landlords and those purchasing second homes—will still pay stamp duty. Those buyers are not exempt from stamp duty; they will all continue to pay stamp duty, because the 3% surcharge will continue to apply to all of them. As I described, a sliver of properties within the £125,000 to £250,000 price range are affected. Even with that sliver, the maximum saving possible for those purchasing additional properties is £2,500.

I want to put this amendment into the context of the private rental sector. The 4.4 million households in the rental sector remain a vital part of the housing market. Renting is the long-term housing reality for many. While we would very much like renting to be a stepping stone to people buying their own homes, we have to understand that, in certain parts of the country, the markets are so hot that for many people, including those people we would love to encourage to be first-time buyers, renting their home is the reality. We must therefore ensure that the measures we take do not imperil or endanger that market, particularly when households are struggling with the cost of living. Further constraints on rental supply will mean higher costs for tenants. My hon. Friend the Member for North Devon set out the significant impact on and decline in the long-term rental market in her constituency. We understand from Zoopla data that rental prices in the country increased in August by nearly 12% year on year. We argue that accepting this amendment would make that situation worse.

We understand the impact of second homes on some of our most popular tourist destinations, such as the south-west. In fact, we are taking practical measures to address that.

Through the Levelling-up and Regeneration Bill, we are setting a new council tax premium on second homes of up to 100% and strengthening the existing premium on empty homes of up to 300%. That means that someone with a second home could face an additional council tax bill of nearly £4,000.

To follow up on that, is it not right to say that people who have second homes pay additional council tax only if those homes are empty and unfurnished, so a very small percentage of those who have second homes will be affected? Does the Minister understand the evidence that the 2020 stamp duty cut fuelled a second home boom? On that basis, why has she done nothing to listen to rural communities such as mine about that and to mitigate it in some way by accepting my amendment or that of the Opposition?

If I have understood the hon. Gentleman correctly, he has misunderstood the measures in the Bill, which introduces a premium on second homes of up to 100% and a strengthening of the existing premium on empty homes. I appreciate his point about empty homes, if people are moving or returning to their second homes, but that is not the scenario everywhere—indeed, in my constituency, I can think of examples where that is not the case. We are trying to use practical measures so that local communities can decide how to deal with it through council tax.

I was talking about complexity. We want to ensure that the system is as simple as possible for taxpayers, which is why we have the consistency of rate bands between the standard rate and the rate for additional dwellings.

Amendment (b), which was tabled by my hon. Friend the Member for Christchurch, seeks to extend the period from 31 March 2025 to 31 March 2028. It is important that the Government maintain a commitment to fiscal responsibility and that requires difficult decisions, as I have set out. The Chancellor was clear about that in the autumn statement, and I hope that the ministerial team have been clear about that when we have spoken at the Dispatch Box. The Government will continue to take difficult decisions to get the public finances on a sound footing and to get debt falling in the medium term.

We therefore announced that the stamp duty cut will end in March 2025 as part of that commitment. It will remain in place until then to support the property market through what we all acknowledge are difficult times. We believe that we have struck the right balance between ensuring support for the jobs and businesses associated with the housing market and the Exchequer cost.

The remaining amendments tabled by hon. Members on both sides of the Committee refer to reports and reviews, if I may summarise them in that way. As my hon. Friend the Member for South Cambridgeshire reiterated, it is a fundamental principle that we are loth to include reporting and reviewing requirements in primary legislation. In any event, we do not believe it to be necessary, because the Government already publish a wealth of data on those matters. For example, HMRC publishes data on property transactions and stamp duty land tax receipts, including data on the use of first-time buyers’ relief. To help hon. Members to understand what that means for our constituents who are first-time buyers, the Bill will mean that they can access up to £8,750 in relief. It is a great shame that Opposition Members propose to vote against that relief.

The Department for Levelling Up, Housing and Communities also publishes the English housing survey. Data on property prices, including at a local level, is published through the Land Registry. The Government published a summary of the measure’s impacts, including on the Exchequer, in November’s autumn statement. I hope that hon. Members who have asked for that data and those reviews will look at that wealth of information and draw their own conclusions.

I thank hon. Members for this debate, which I very much welcome, but I commend the Bill to the Committee. I particularly commend the Government amendments to enable first-time buyers in our constituencies to get on to the housing ladder, and to help other constituents move up the housing ladder and continue to thrive in our country in the next couple of years.

Before I put the Question, I should just say that I am anticipating three votes: two in Committee and one on Third Reading. The first vote will last for 10 minutes and the two subsequent ones will last for eight minutes each, so if I were you I really would not go anywhere after voting in the first Division.

Amendment proposed to amendment 1: (a), after “transaction” insert

“(except in relation to additional dwellings)”.—(Abena Oppong-Asare.)

This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).

Question put, That the amendment be made.

Amendment 1 agreed to.

Amendments made: 2, page 1, line 3, leave out “In section” and insert “Section”

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 3, page 1, line 3, leave out “, for Table A substitute” and insert

“has effect as if for Table A there were substituted”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 4, page 1, line 13, leave out “In”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 5, page 1, line 14, leave out “, for” and insert

“has effect as if for”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 6, page 1, line 14, leave out “substitute” and insert “there were substituted”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 7, page 2, line 4, leave out first “In” and insert “Paragraph 2(3) of”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 8, page 2, line 4, leave out “, in paragraph 2(3), for Table A substitute” and insert

“has effect as if for Table A there were substituted”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 9, page 2, line 10, leave out

“In Schedule 6ZA (relief for first-time buyers)”

and insert

“Schedule 6ZA (relief for first-time buyers) has effect as if”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 10, page 2, line 11, leave out “substitute” and insert “there were substituted”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 11, page 2, line 12, leave out “substitute” and insert “there were substituted”.

This amendment is consequential on Amendment 1 (which provides for the relief from Stamp Duty Land Tax provided for by the Bill to apply only until 31 March 2025).

Amendment 12, page 2, line 19, leave out subsection (6) and insert—

“(6) In a case where—

(a) as a result of section 44(4) of the Finance Act 2003 the effective date of a land transaction falls in the temporary relief period, and

(b) the contract concerned is completed by a conveyance after that period ends,

section 44(8) of that Act is not to apply in relation to that conveyance if the sole reason that (but for this subsection) it would have applied is that the modifications made by subsections (2) to (5) have no effect in relation to that conveyance.

(7) Section 44(10) of the Finance Act 2003 applies for the purposes of subsection (6).”—(Victoria Atkins.)

This amendment inserts transitional provision in connection with Amendments 1 to 9. It provides that transactions that straddle the end of the temporary period of reduced Stamp Duty Land Tax will get the benefit of the reduction.

Clause 1, as amended, ordered to stand part of the Bill.

Clause 2

Short title

Amendment made: 13, page 2, line 22, leave out “(Reduction)” and insert “(Temporary Relief)”.—(Victoria Atkins.)

This amendment amends the short title of the Bill in consequence of Amendments 1 to 12 (which provide for the relief from Stamp Duty Land Tax provided for by the Bill to only apply for a temporary period).

Clause 2, as amended, ordered to stand part of the Bill.

New Clause 3

Review: second homes in National Parks and Areas of Natural Beauty

“The Chancellor of the Exchequer must publish an annual report on the impact of this Act on the number of second homes in National Parks and Areas of Natural Beauty.”—(Tim Farron.)

This new clause would require that an annual report is published on the impact of the Bill on the number of second or subsequent homes in National Parks and Areas of Natural Beauty.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

More than two hours having elapsed since the commencement of proceedings, the proceedings were interrupted (Order, 24 October).

The Chair put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

Amendment made: 14, in the Title, after “Reduce” insert “, for a temporary period,”.—(Victoria Atkins.)

This amendment amends the long title of the Bill in consequence of Amendments 1 to 12 (which provide for the relief from Stamp Duty Land Tax provided for by the Bill to only apply for a temporary period).

The Deputy Speaker resumed the Chair.

Bill, as amended, reported.

Bill, as amended in the Committee, considered.

Question put forthwith (Order, 24 October) That the Bill be now read the Third time.

Bill read the Third time and passed.