First Time Buyer
MPs vote against permanent stamp duty cut
In the Autumn Statement, Hunt reversed the decision made by his predecessor Kwasi Kwarteng to permanently raise the threshold for stamp duty land tax from £125,000 to £250,000.
Instead, he announced the stamp duty cut would be temporary, ending in March 2025.
The Stamp Duty Land Tax (Reduction) Bill has this weekend undergone a third reading in the House of Commons, where an amendment to make the stamp duty reduction temporary was agreed.
The Bill was introduced on 24 October following the disastrous mini Budget.
A new economic environment
During the third reading in the House of Commons, Conservative MP Christopher Chope, said: “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.”
Victoria Atkins, financial secretary to the Treasury, said the government had to acknowledge the reaction to the mini Budget and introduce a sunset clause.
MP Tim Farron said the reduction only met the needs of a “very small number of people”, especially now that mortgage costs had risen.
He also said that the stamp duty holiday which was introduced in 2020 had led to a rise in the sale of second homes.
The benefits of a permanent reduction
MP Craig Mackinlay said the stamp duty land tax stopped labour mobility as the levy prevented people from selling their homes and moving to another area for work. He also said it limited retirement mobility because older homeowners avoided the tax by not downsizing.
He added: “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.”
MP Helen Morgan said the previous stamp duty holiday showed that the tax break distorted the market and noted that houses with a value of £250,000 or lower remained in “desperately short supply”.
She added: “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.”
Chope noted that when the stamp duty reduction was announced as part of the mini Budget’s Growth Plan, it stated that 200,000 homebuyers, including 60,000 first-time buyers, would benefit.
He said the change would bring these people back into the stamp duty liability.
Chope added: “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?”
Supporting the property market
Atkins said the temporary reduction was intended to support the housing market during economic uncertainty while managing the cost to the state.
She added: “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 Bill will go to the House of Lords for a first reading in due course.