MPs agree to reverse SDLT cut from April 2025

The legislation passed the House of Commons on Tuesday 10 January after it was given a third reading by 308 votes to 170, a majority of 138, and will now move on to the House of Lords. The Bill raises the threshold for SDLT from £125,000 to £250,000, while first-time buyers will pay no SDLT on home purchases up to £425,000 and gain access to the relief when buying a property costing less than £625,000.

The SDLT cut was one of the few measures from Kwasi Kwarteng’s 23 September ‘mini-Budget’ to survive the transition to new Chancellor Jeremy Hunt. However, during the 17 November Autumn Statement, Hunt announced the introduction of a sunset clause to the SDLT reduction, reversing the cut in March 2025. As a consequence of the changes to the Bill made on 10 January it has become the Stamp Duty Land Tax (Temporary Relief) Bill.

Along with the sunset clause, MPs approved an amendment to ensure that transactions which straddle the end date will still get the benefit of the reduction. However, amendments tabled by Labour and the Liberal Democrats to remove the relief for those buying second or additional homes were rejected, with the latter focusing on the impact to rural areas.

There were also several rejected amendments which sought to conduct reviews and assessments into the impact of the bill on first-time buyers, the number of second homes in National Parks and Areas of Natural Beauty, house prices and the housing market, the availability of affordable housing and the private rented sector, as well as the effect of switching from a permanent to temporary tax relief.

Committee of Whole House debate

Shadow Exchequer Secretary Abena Oppong-Asare, speaking for Labour, said the legislation will not benefit those trying to buy homes, as the expected savings made from the SDLT cut “pale into insignificance” in comparison with higher mortgage bills. She said: “While many first-time buyers will see no saving from the stamp duty changes…second home buyers, or landlords buying additional properties, will receive a tax cut of up to £2,500 on each transaction.”

Liberal Democrat Tim Farron agreed that the Bill “meets the needs of a very small number of people”. The Westmorland and Lonsdale MP said a previous SDLT holiday on properties up to £500,000 in 2020 had a “catastrophic” impact on his Lake District constituency, with the majority of new sales being second homes. He said: “It robs us of the life of our communities and the services on which we rely, but it also robs us of a workforce. That means fewer people working not only in social care or health, but in our hospitality and tourism industry.”

Fellow Liberal Democrat Helen Morgan added: “In rural parts of Britain our villages are at risk of turning into retirement villages and our tourist hotspots are almost becoming ghost towns at certain times of the year. Meanwhile, genuinely affordable housing—housing costing less than £250,000—remains in desperately short supply.”

The amendment to end the relief in 2025 was poorly received by some MPs. Sir Desmond Swayne, Conservative, said: “Those of us who voted with enthusiasm for the Bill’s Second Reading on the grounds that there was to be a permanent change for the benefit of those people wanting to get onto the housing ladder are somewhat discomfited by the fact that Government amendment one will make it merely a temporary measure to assist those who want to do so.”

Conservative Sir Christopher Chope, who tabled the amendment which would have extended the relief further to March 2028, said the measures in the bill will “increase tax permanently by about £1 billion a year from April 2025”.

Chope proposed that the Government consider abolishing SDLT entirely, which he claimed would be a “very popular” policy. He said the tax is “arbitrary, clunky and unfair in how it applies in different parts of our country” and suggested it could be replaced by a transaction tax based on factors such as the size of a property, though he conceded that this would also “create some losers”.

He said the current SDLT, even at temporarily reduced levels, disadvantages sellers, as buyers “will have to budget for making payments to the Government”, while the numbers of people who can’t afford to live where they work and must commute long distances were contributing to environmental damage.

Another Conservative, Craig Mackinlay, a chartered tax adviser, agreed that an alternative starting point for the tax paid on properties should be considered given the gulf between house prices in different parts of the country. He said: “I would rather that everyone paid a similar amount in a property transaction, possibly based on the size of the property.”

Mackinlay added that SDLT “stops labour mobility” by preventing workers moving to other areas of the country for fear of high tax bills, while it also disincentivises retirees from downsizing. He said he had often advised clients hoping to sell their second homes to “sit on it until you die and leave it to your family” due to high tax bills and called for greater measures to encourage downsizing. He said: “Perhaps they could get some credit, such as free stamp duty, for doing the right thing in moving to a smaller home. In so doing, they would be releasing those bigger homes for the families who need them.”

However, Anthony Browne, chair of the Conservative Party’s backbench Treasury committee, said simply abolishing SDLT, which generates £14 billion last year, would leave “a hole” in public finances. He said: “My more nuanced argument is that people buying houses to live in are overtaxed, but people buying properties either as second homes or for investment are undertaxed.”

Browne suggested a flat-rate SDLT, allowing homebuyers to pay the same rate whatever the value of their property, as well as an annual tax on non-residential property owners or an increase in property tax on second homes. He drew attention to proposals put forward by two think tanks - the Centre for Policy Studies and Onward. "By ramping up the tax on second and investment properties and cutting away the tax on people buying homes to live in, we can basically scrap stamp duty for homebuyers in a fiscally neutral way for the Government," he said, urging the Treasury to look at those proposals.

Independent MP Jonathan Edwards said the Welsh Government has already introduced a land transaction tax to replace SDLT, where local councils can also choose to double or treble council tax on second homes, while Barry Gardiner, Labour, suggested SDLT could be linked to energy efficiency in order to help meet government targets on reducing greenhouse gas emission, with the tax raised or lowered in line with a property’s energy performance.

Selaine Saxby, Conservative, said the previous SDLT relief in 2020 created a “surge in short-term holiday lets and second home purchases”, adding: “We desperately need to find a way to encourage buy-to-let landlords.” She also addressed the Government’s claims that the measures will reduce SDLT bills for all movers by up to £2,500, questioning whether this was “a large enough sum to motivate a change in behaviour in people who are buying additional properties.”

Responding for the Government, Financial Secretary Victoria Atkins said it had to take “some difficult decisions” to ensure that its approach to the economy was “fiscally responsible” and the revised bill was one of the ways it planned to stimulate the housing market over the next two years.

She said the Government has “no plans” to abolish SDLT and that government-backed schemes such as Help to Buy were already in place to help first time buyers, while measures in the bill will help those who are looking to downsize.

Atkins said the amendment to remove second homes from the scope of the bill would impact those buying rental properties and, in turn, tenants. She said legislation must protect the rental market as, for many, “renting their home is the reality”.

She added that other legislation was already addressing the issue of those with second homes, with measures in the Levelling-up and Regeneration Bill meaning they could face an additional council tax bill of nearly £4,000.

On the amendment to extend the relief until 2028, Atkins reiterated that the Government was making difficult decisions in regard to the economy, adding: “We believe that we have struck the right balance between ensuring support for the jobs and businesses associated with the housing market and the Exchequer cost.”

She also spoke against the several amendments calling for reviews of the policy on areas including second homes and the housing market, saying the Government had already published “a wealth of data on those matters”.

There were two committee stage votes. A Labour amendment to remove the relief from SDLT for second homes was voted down 311-184. A Lib Dem new clause to require an annual report on the impact of the Bill on the number of second or subsequent homes in National Parks and Areas of Natural Beauty was rejected 310-14.

There was no third reading debate. The Bill passed its third reading 308-170.

You can view the amendments tabled for the debate here and read the full Hansard of the debate here.