MP’s support SDLT holiday extension in Parliamentary debate
On Monday 1st February Parliament debated the much-anticipated e-petition relating to Stamp Duty Tax relief.
The debate, which has been timetabled despite the threat of temporary suspension to Parliamentary debates, discusses the position has come about as a result of an online petition achieving the statutory 100,000 votes and is non-binding on the government.
The e-petition was set up to lobby the government to consider an extension to the SDLT holiday, due to end on 31st March.
Tracking industry sentiment, Today’s Conveyancer reports what looks to be an increasing divide between practitioners and industry bodies over the extension of the Stamp Duty Holiday with many practitioners taking to social media to express concern over the continued impact on workloads and well-being in the event of an extension.
Introducing the debate MP for Carshalton and Wallington Elliot Colburn said that the purposes of the debate is to discuss the extension of Stamp Duty, not wholesale change to SDLT. He also made a point of noting the huge amount of interest in this petition.
Mr Colburn acknowledged that the Stamp Duty holiday was welcome; recognising that although there is no direct evidence, there are strong indicators that the relief has led to a boom with an influx of buyers and sellers. Indeed the latest HMLR stats show transactions are 32% higher than this time last year. Not all of this comes down to SDLT holiday but it has been a contributor, suggested Mr Colburn.
Mortgage provider Paragon has provided data which shows that 2/3rd of buyers are dependent on completion prior to 31st March, a pipeline they believe is equivalent to £1.5bn. The data also shows that 51% of cases could collapse, while 42% of buyers would be unable to continue with the purchase if they miss the SDLT holiday deadline resulting in an unprecedented rise in fall throughs.
Elliot Colburn outlined 4 options the Government might consider as a result of the debate:
- Move the deadline to a new arbitrary date
- Consideration for relief on properties already so far along the process
- Taper off relief by eligibility of house price over a period of months
- Maintain the threshold at £500k permanently
Kevin Hollinrake, MP for Thirsk and Malton and Chairman at Hunters Estate Agents outlined the danger of the “cliff edge” which he warned would have a counterproductive effect on the economy, borne out of experience in his own business.
He felt there is an option to allow those who are at a sufficiently advanced stage to continue with the property and benefit from relief.
Describing the holiday as “a good concession at the time” Mr Hollinrake urged Government to avoid a cliff edge, and offer people who for example have a mortgage offer by the end of February, the opportunity to benefit from the relief beyond the end of the March deadline.
Hackney North and Stoke Newington MP Diane Abbott called for a very specific extension in her constituency where the local council has been the victim of a significant cyber attack in late 2020 which has prevented the council from producing full Local Authority searches with the relevant knock on impact for buyers and lenders.
Greg Smith, MP for Buckingham, described how in his own constituency, data from TwentyCi indicates how the risk of fall through could see up to £9m lost by conveyancers and estate agent fees; while around £1m in wider home moving spending, such as property renovation and furnishings, could be lost.
TwentyCi data also suggests that 200,000 movers nationally may miss out on the SDLT holiday and locally, estate agents have suggested that sales are falling through as a result of the deadline.
Mr Smith also cited a 2019 paper by the Centre for Policy Studies suggested each 1% fall in Stamp Duty may result in increase in a 20% increase in transactions numbers, while abolishing it would result in 25% more home movers.
Mr Smith implored the Government to step in, regarding it as essential to ensure “we make the holiday count.”
Echoing the sentiments of previous speakers, Janet Daby MP for Lewisham East, Dr Matthew Offord, MP for Hendon, and Barbara Keeley MP for Worlsey and Eccles South followed with similar cases of constituents affected by the deadline.
Dr Offord cited statistics from the House Builder’s Federation which suggested that extending the holiday to the end of the year may result in 10% more transactions, bringing an additional £1bn worth of consumer spend supporting 11,000 jobs in the wider economy.
Both Sarah Olney, MP for Richmond Park and Ben Everitt, MP for Milton Keynes North, recognised the tax income generated by SDLT, discussing the financial impact of these lost revenues at a time of unprecedented public spending, calling on the Government to consider wholesale change to a tax described as regressive and not properly encouraging home ownership.
Responding on behalf of the Government, Jesse Norman MP, Financial Secretary to the Treasury, acknowledged the efforts of the industry in challenging circumstances to meet the increased demand.
Revisiting the introduction of the relief, Mr Norman cited the Government’s role in tackling the 50% drop in transactions; the SDLT holiday was designed to stimulate immediate momentum in the property market, protecting jobs in t he sector.
As a policy, it has worked. Mr Norman pointed to a 34% increase in December transactions year on year, with the wider range of benefits across consumer spending.It was, Mr Norman said, the time limited aspect of the measure which has driven the demand.
While unable to discuss tax policy outside of a fiscal event, Mr Norman acknowledged the points debated and thanked the panel for their contributions.
Closing, Elliot Colburn identified “a rare moment of unity” from across the political parties around SDLT reform and in bringing the debate to a conclusion suggested that some sort of tapered end to the holiday was the most popular point which would be of most benefit to those affected.
The full debate can be viewed here below