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Finance
4 Feb 2021

Members of Parliament back stamp duty holiday extension

mohammed
mohammed

MPs back stamp duty holiday extension

An extension to the stamp duty holiday seems increasingly likely in one form or another, after a number of MPs spoke out in support of the proposal.

This week there was a 70-minute parliamentary debate on the issue of extending the stamp duty relief, after an e-petition calling for a six-month extension gained over 100,000 signatures (141,629 at the time of writing).

The holiday is due to end on March 31st, and there are fears a number of people could miss out on the stamp duty saving of up to £15,000 owing to the sluggish way the market is operating.

We’ll likely find out what’s happening with the buyer tax by the time the Budget is announced on March 3rd.

Previously the government has ruled out an extension, but it remains to be seen whether it changes its tune owing to the growing calls for something to be done.

Voices of support

Conservative MPs Greg Smith, Kevin Hollinrake, Elliot Colburn spoke out in support of the petition, along with Labour MPs Barbara Keeley and Janet Daby.

However, most of them argued that allowances should be made for people already going through the process of buying or selling, rather than an outright extension.

Barbara Keeley, MP for Worsley and Eccles South in London, said: “It need not be an open-ended extension to the duty holiday, but could retrospective, to allow anyone who has already had an offer accepted to be exempt from stamp duty, even if they are unable to complete by March 31st.”

Similarly Kevin Hollinrake, MP for Thirsk and Malton, suggested for people to get an extension provided they’ve received a mortgage offer by the end of February.

Other responses

Elliot Colburn, who represents Carshalton and Wallington, reckoned the policy should be tapered and wound down.

Janet Daby, MP for Lewisham East in London, called for an outright extension to the holiday, as was proposed in the petition.

Meanwhile Labour MP Dianne Abbot called for an extension in her constituency of Hackney, due to a cyber-attack affecting council services in the area over the past few months.

Critics of the holiday

Liberal Democrat MP Sarah Olney said the holiday has already cost the Treasury £3.8bn, while she argued that resolving cladding issues is more urgent than extending the relief.

However she still urged the Treasury to make allowances for transactions that have already commenced.

Abena Oppong-Asare, Labour MP for Erith and Thameshead, said the stamp duty relief has resulted in an overheating of the market.

She said: “The overheating now looks set to be followed by a crash of many people’s sales.”

Oppong-Asare added that an outright extension to the holiday would create another cliff edge down the line.

Critics of stamp duty

The response to the petition revealed that a number of Conservative politicians have an issue with stamp duty in general.

Greg Smith, the MP for Buckingham, accused the buyer tax of disincentivising transactions and capping people’s aspirations.

And Kevin Hollinrake said stamp duty should be abolished and replaced by a new proportional property tax.

Clearly there’s some appetite to reform property taxes within parliament.

Our view

Based on the opinions expressed by MPs, it seems likely that allowances will be made for those who have transactions ongoing.

While MPs are divided about stamp duty, they almost all seem to agree that people whose transactions are in the pipeline shouldn’t lose out on the tax cut.

The outright extension to stamp duty relief of six months, as proposed by the petition, seems more unlikely to happen, because it would be an expensive move for the Treasury and would create a cliff edge down the line.

While we’ll know where the government stands by March 3rd, I hope there’s transparency before then, so homebuyers don’t have to guess where they stand.

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