Revealed: Sunak’s secret £1bn giveaway to second home owners and landlords
The Labour party is calling on the government to reverse a £1.3bn bung to second home owners and landlords snuck out by the Chancellor.
Following the Chancellor’s economic statement, the Treasury slipped out an announcement that buyers of buy-to-let properties, holiday homes and other second homes will benefit from a major reduction in stamp duty.
This comes as the government has faced criticism for its poor targeting of financial support – leaving many businesses and individuals struggling.
Stamp duty on second homes is currently 3% higher than the standard rate, meaning that someone buying a second home would pay 8% rather than 5% on the value of the property between £250,000 and £925,000.
In 2019/20, 34% of homes bought were second properties, meaning this bung to second home owners could cost the taxpayers £1.3 billion. In a letter to Robert Jenrick, Labour has called for the government to exclude second properties from this cut – arguing that this could fund the immediate gap in local councils’ finances, which the Local Government Association predicts will be £1.2 billion by the end of the year.
Commenting Thangam Debbonaire, Labour’s Shadow Housing Secretary said:
“It is unacceptable that the Chancellor tried to sneak out this huge bung to second home owners and landlords while millions of people are desperate for support. He should be targeting support to those who need it, not helping people invest in buy-to-let properties and holiday homes.
“An unnecessary subsidy for second home-owners will only worsen the housing crisis by reducing the supply of homes overall.
“We need a credible plan from Tory Ministers to build the homes our country needs and get people on to the housing ladder. We didn’t see that this week.”
Note to editors
- According to the House of Commons Library, since its introduction in 2016, around 29% of all liable transactions have been subject to the Higher Rate (of Stamp duty) for Additional Dwellings.
- The majority (88%) of property sales subject to Higher Rate (of Stamp duty) for Additional Dwellings are on properties sold for under £500,000.
- The letter in full:
The Rt. Hon Robert Jenrick MP
2 Marsham St,
9 July 2020
I am writing to you after the Chancellor’s financial statement in the Commons yesterday.
Subsequent to the Chancellor’s statement, the Treasury has revealed that the stamp duty changes will also provide a tax break for second homeowners.
The Treasury has confirmed that those looking to buy a second property or buying to let, will only have to pay stamp duty at 3% up to £500,000, rather than the 8% from a quarter a million up.
I’m seeking to clarify why your government is giving such a large tax break to owners of second homes at a time of an acute housing crisis.
If someone bought a second home yesterday for half a million pounds, they would have expected to pay £15,000 more than they would today.
You’ll know that in total, since its introduction in 2016, around 29% of all liable transactions have been subject to the Higher Rate (of Stamp duty) for Additional Dwellings. The majority (88%) of HRAD transactions are on properties sold for under £500,000.
In 2019/20, 34% of homes bought were second properties meaning this policy could cost the exchequer £1.3 billion. This could fund the immediate gap in local council finances, which the LGA predicts will be £1.2 billion by the end of the year.
At a time when we have an acute local government funding crisis, I question how the Government can justify giving a tax break to people already fortunate enough to own an existing property rather than giving councils the funding they need.
Over a million people are on council waiting lists whilst the number of new social homes has fallen by 80%. This money could be much better spent on truly affordable housing to buy or rent, rather than on a tax break for second homeowners.
The Chancellor had an opportunity to rebuild and invest in truly affordable housing to buy or rent. But he failed to take it. He talked about jobs but did little to address the skills shortage in construction sector.
Please urge the Chancellor reverse his decision to give a tax break to second homeowners. We are calling for clear action in the spirit of constructive engagement.