Labour has accused Rishi Sunak of announcing a tax break for second homeowners and landlords with his stamp duty cut while failing to announce measures to “tackle runaway house prices and build truly affordable housing”.
Following the Budget announcement on Wednesday, the opposition party has today highlighted that the continuation of a reduced rate of stamp duty land tax to September will hand half a billion pounds to landlords and holiday lets.
34% of homes bought in 2019/20 were second homes, buy-to-let properties or residential properties bought by companies. Documents from the Treasury show that the reduced rate of stamp duty will cost £1.6bn.
Labour argued that the Chancellor has therefore given a £545m boost to landlords and second homeowners and said the money could have been spent to build 3,000 social rented homes – half the total built across England last year.
“The Conservatives have shown once again they have the wrong priorities, giving tax breaks to landlords and second homeowners while failing to tackle runaway house prices and build truly affordable housing,” Thangam Debbonaire said.
The Shadow Housing Secretary added: “After a decade of failure on housing, we needed a Budget that put us on the road to recovery and addressed the fundamental flaws in the housing market. Instead we got reheated policies with no new ideas on housing.”
The Chancellor argued on Wednesday that the reduced rate of stamp duty, alongside a government guarantee for lenders to encourage 95% mortgages from April until the end of 2022, would create “generation buy”.
Labour leader Keir Starmer heavily criticised the guarantee scheme in his response to the Budget and stressed to MPs that the idea is a recycled policy, telling them that “it’s what Osborne and Cameron came up with in 2013”.
On subsiding 95% mortgages, the Labour leader told parliament: “What did that do? What did that do? It fuelled a housing bubble, it pushed up prices, and made owning a home more difficult. So much for ‘generation buy’.”
A stamp duty holiday was first announced last summer and was due to end on 31st March. The Chancellor said on Wednesday that in England and Northern Ireland the threshold for the tax to start would remain at £500,000 until 30th June.
After that, it will be reduced to £250,000 until 30th September, before returning to its original level of £125,000. Early in the pandemic, lenders stopped offering 95% mortgages and many are still capping borrowing below 90%.
Labour criticised Sunak for a poorly targeted Budget emphasising that while Local Housing Allowance has been frozen, 700,000 renters across the country face a shortfall between their rent and support available through Universal Credit.
The party also highlighted that the Chancellor announced no support to prevent homelessness during the coronavirus crisis when the temporary evictions ban is lifted and warned that over half a million renters are currently in arrears.