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.
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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.