LATEST NEWS ON WHETHER THE STAMP DUTY DEADLINE OF MARCH 31ST WILL BE EXTENDED OR NOT
Labour and Conservative MPs have expressed a unanimous view on their desire to see an extension of the stamp duty holiday - but the government is staying tight-lipped about any change of heart.
Labour and Conservative MPs have expressed a unanimous view on their desire to see an extension of the stamp duty holiday - but the government is staying tight-lipped about any change of heart.
A 70 minute debate in a 'virtual' House of Commons this afternoon heard MP after MP agree on calling for an extension, many specifying a tapered end being preferable to another later cliff edge deadline. Only one MP, a Liberal Democrat, voiced opposition to the move.
The political convention of the government not making formal tax announcements outside of the Budget or similar 'events' meant that no view was given by Jesse Norman MP, the Treasury minister who wound up the debate for the government.
Here's what was said by whom during the session:
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Session chaired by Catherine McKinnell MP (Labour)
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Elliot Colburn MP (Conservative), a member of the Petitions Committee, started the session. He said the petition [which you can see produced in full below] was unusually controversial and he said that in his time on the House of Commons Petitions Committee, he had not seen so much correspondence on any issue subject to an e-Petition.
He said there was substantial evidence that the stamp duty holiday extension had led to “something of a boom” because it had created a feeling of buyer confidence.
Colburn said conveyancers, estate agents and constituents had emphasised that many buyers may miss out because delays would extend their purchase times beyond the current March 31 ‘cliff edge’ deadline.
He added that a phased and tapered winding down could be put forward by the government to avoid overnight shocks such as that possible on March 31.
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Catherine West MP (Labour), said revenue to HMRC could be used for social housing or more general house-building, meaning the specific SDLT issue had to be examined in the round and not solely as a tax break for buyers, investors or second home purchasers.
Even so she said she had received numerous emails from constituents, “dozens” saying they were worried that their purchases may not go through in time and in some cases would then fall through.
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Kevin Hollinrake MP (Conservative, and outgoing chairman of Hunters estate agency): Hollinrake said moving the end date would simply create a further cliff edge instead of the one currently likely at March 31. Therefore he suggested that buyers who had reached a certain stage of their purchase should be allowed to continue and benefit from the stamp duty holiday.
The full holiday extension should not be given, because cliff-edges are counter productive, he said. A further cliff edge would create a possible bubble.
More broadly, Hollinrake said there was a strong case for more comprehensive reform, as part of wider property tax reforms, but this should be seen as a longer term objective.
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Dianne Abbott MP (Labour): She called for an extension because of a particular “disaster” which happened in her constituency of Hackney, namely a cyber attack which led to huge delays in council services including the provision of search information from the planning department.
As a result the council cannot provide the necessary information required by mortgage lenders, and will not be able to do so for some considerable time to come.
Abbott said there would be no fiscal consequences to the government and buyers in Hackney should be given their own specific stamp duty holiday extension.
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Greg Smith MP (Conservative): He told the debate that he was himself looking for a larger house, and that he had received a large postbag of emails and calls about the issue.
The property market is facing a cliff-edge, he said, which would have “a devastating impact” threatening the stability of the market. He said 200,000 sales would miss out on the deadline through no fault of the buyers themselves: his constituency alone would lose out on £1m of spending on agents, law firms, decorators and others.
He said in a wider perspective, SDLT penalised many prospective buyers and there should - in the longer term - be a reform of the tax.
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Janet Daby MP (Labour): The surge in transactions was a positive for the economy and one of the few bright financial highlights during the Covid pandemic, she said, adding that many first time buyers were helped by the holiday.
She believed buyers should not be put into further financial difficulties because of the pandemic causing delays. Daby suggested SDLT relief should join those other financial measures which have been extended by the government, as property buying was “a key indicator of the country’s financial success.”
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Matthew Offord MP (Conservative): He said an extension until the end of 2021 would boost transactions by 10 per cent and particularly facilitate downsizers whose impact on chains would in turn end up helping first time buyers.
“A number of my constituents have told me that they will not be able to go ahead with their property purchases if they can’t complete by March 31.”
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Barbara Keeley MP (Labour): She claimed this issue was of vital importance to tens of thousands of constituents across the country, with fall-throughs likely and individual homebuyers being out of pocket because of legal expenses.
Keeley told MPs that no one could have foreseen the multiple lockdowns and restrictions which happened after the stamp duty holiday was first introduced. Because of the current lockdown buyers are penalised. People who have made a commitment in the reasonable expectation that they would not pay stamp duty should not be penalised.
She added that an extension would mean fewer people involved in a transaction would have to travel into offices during lockdown.
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Sarah Olney MP (Liberal Democrat): She said she was against this when the stamp duty holiday was introduced and remains against it now - the holiday was nothing more than a tax break for buyers.
She said SDLT was regressive and poorly designed but that did not alter the current position whereby the Treasury was effectively subsidising house buyers - that was wrong. This money could be better spent on more deserving causes, whether it was better funding for furlough, benefits for town centre businesses and elsewhere. The cladding scandal would be a better issue on which to spend public funds, she said.
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Ben Everitt MP (Conservative): It’s a complicated issue and a lot of cold hard cash for the Treasury rides on this.
The end needs to be tapered to avoid the cliff-edge and whilst he appreciated the Budget in March was the correct place for the government to make a formal announcement, he would be hoping for a gradual and fair end to the holiday - not an overnight one.
Longer term Everett called for a reform of SDLT in the round and there should be an exit strategy from this “dangerous” tax which was “a brake on social mobility.”
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Abena Oppong-Asare (Labour front bench): At the time this policy was announced, Labour criticised the government for allowing a large proportion of this financial support to go to second home and buy to let purchasers.
An additional flaw in this policy, she said, was the creation of a cliff edge thus penalising purchasers delayed in their transactions through no fault of their own.
There are a whole set of reasons why transactions can be delayed - this seems to be another example of the Chancellor’s short term stop-start approach to the Coronavirus crisis.
The overheating encouraged by the holiday will now be followed by a possible crash as buyers pull out, or lose the holiday benefit they had budgeted.
Labour would have concerns at the creation of another cliff-edge.
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Jesse Norman MP, (Conservative, for the government): More than 100,000 people signing the e-petition deserved praise, he said, highlighting the importance.
The government is aware of the strength of feeling on the issue, and the stress involved in each property purchase. He thanked agents, conveyancers and all those in the property buying process who have worked so hard in challenging circumstances.
The first lockdown in spring 2020 and the start of the pandemic created huge uncertainty, leading to a short term fall in transactions of 50 per cent. The holiday has therefore worked extremely well, as transactions are now up some 34 per cent year on year.
It was the time-limited element of the measure that drove the surge in activity, which is important for the whole economy.
Beaumont Gibbs will keep you updated as soon as we hear any further news.