Government minister Jesse Norman has said that the benefits of a stamp duty holiday were precisely linked to the short period of time it was in place.
His comments came as the Government faced calls from MPs to ensure that people who are in the process of buying homes do not lose out if their deals complete after the impending deadline.
The Treasury announced last year that it would temporarily raise the stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland.
But many people have been left scrambling to complete their transactions before the deadline of March 31, worried that if they do not, they could be left with a £15,000 tax bill.
It was exactly the time-limited aspect of the measure which drove that increased demandJesse Norman
Responding to a petition, which has 140,000 signatures, calling for the holiday to be extended by six months, Mr Norman said: “I fully understand the frustrations of those who are as we speak in the process of purchasing a property, perhaps as part of a chain, and who may be concerned at the delays that they face.”
But he added: “The measure was designed to drive the recovery of the housing market in England and Northern Ireland, that is to stimulate immediate momentum in the property market and thereby to help to protect businesses and jobs in the sector by keeping house sales moving.
“It was exactly the time-limited aspect of the measure which drove that increased demand, which is exactly why the end date of March this year was announced when the policy itself was first introduced.”
The policy had helped protect hundreds of thousands of jobs, he said, but added that he was unable to comment on tax policy at this time, with a budget fast approaching next month.
There was unanimous support from MPs who spoke for some kind of measures to help those who risk losing out.
However, MPs did warn that simply extending the holiday for another few months would simply kick the can down the road.
Elliot Colburn, a Conservative MP, said that a phased re-introduction would make sense, while his party friend Kevin Hollinrake called for it to be extended for those who have already progressed far with their sale.
“We are approaching a cliff edge, that’s the reality, and simply extending this further would create another cliff edge. If you said, give this another three months, there would be another cliff edge and similar people would experience similar things,” Mr Hollinrake said.
Liberal Democrat MP Sarah Olney, who spoke against the rate holiday when it was first introduced, backed calls for transactions that were far progressed to be made exempt, even if they are completed after the deadline.
But she said there were better ways to support the housing market, including helping people stuck in buildings with unsafe cladding.
“Many flats that are now unsellable, thousands of families that cannot move, a far better way to support the housing market and unblock some of these issues is to properly fund the remediation of flammable cladding for all buildings,” she said.
Mr Colburn quoted figures from Paragon Bank which suggested that two-thirds of those who have agreed to a transaction are – or have another buyer in their house buying chain who is – dependent on the stamp duty holiday.
Paragon suggested that £1.5 billion-worth of transactions could be withdrawn because people’s transactions run beyond the deadline.
Abena Oppong-Asare, speaking for Labour’s front bench, said: “With the relief lasting for less than nine months in total we, therefore, have a perverse situation that much of the benefit could have gone to people whose home purchase were already under way when the outbreak began, whilst many who begun home hunting on the promise of the relief will miss out.”
She added: “This seems to be yet another example of the Chancellor’s short-term stop-start approach throughout the crisis.
“The stamp duty relief stoked the housing market, which already had pent-up demand from the first Covid lockdown, causing demand for homebuying services to far outstrip the market’s capacity.
“The overheating now looks set to be followed by a crash of many people’s sales. If people cannot complete before the relief time is out, they will face an extra charge of up to £15,000.”