Labour accuses Rishi Sunak of £1.3 billion 'bung' to landlords

9 July 2020, 23:13

Labour has accused Rishi Sunak of £1.3 billion 'bung' to landlords
Labour has accused Rishi Sunak of £1.3 billion 'bung' to landlords. Picture: PA

By Maddie Goodfellow

Labour is calling on Chancellor Rishi Sunak to reverse what it describes as a £1.3 billion "bung" to second homeowners and landlords in his coronavirus recovery package.

Most buyers will pay no stamp duty on the first £500,000 of their purchase between July 15 and March 31 as part of Mr Sunak's emergency measures to boost the ailing economy.

But Labour accused the Government of having "snuck out" a plan to extend a reduction to owners of buy-to-let properties, holiday homes and other second properties.

Shadow housing secretary Thangam Debbonaire said: "It is unacceptable that the Chancellor tried to sneak out this huge bung to second homeowners and landlords while many 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 homeowners will only worsen the housing crisis by reducing the supply of homes overall."

Mr Sunak ordered the stamp duty threshold be raised from £125,000 to £500,000 where it is paid in England and Northern Ireland.

The move also applies to those buying additional properties, though they will still have to pay the additional higher rate which starts at 3% for those homes.

Ms Debbonaire wrote to Housing Secretary Robert Jenrick, who is under fire for unlawful approval of a Conservative Party donor's development, demanding the "tax break for second homeowners" is reversed.

She argued that the cost of the measure would be £1.3 billion and the funds should instead be used to cover the £1.2 billion funding shortfall estimated by local councils.

Experts have also said the scheme will benefit homeowners in London and the South East of England the most.

Conservative Party co-chairman Amanda Milling said: "It beggars belief that Labour is against plans to help thousands of families across the country.

"Our plans mean 90% of people getting on or moving up the property ladder will pay no stamp duty at all.

"Sir Keir Starmer's Labour will turn whichever way the wind blows. They say different things from one day to the next to try and score political points and chase headlines."

On Thursday, the Chancellor told LBC that he does not have a "crystal ball" to predict what might happen with the economy if a second wave of coronavirus hits the UK.

Rishi Sunak said he is prepared to make “difficult decisions” when asked about tax rises as the UK recovers from coronavirus lockdown.

Speaking to LBC’s Nick Ferrari, the Chancellor said we “obviously can’t live like this” while discussing public finances amid huge recovery packages to stimulate the economy.

Asked whether tax rises would be necessary to help pay for that, he said: “You’re right, of course we need to make sure we have sustainable public finances.

“I think I would differentiate between the things we do this year that are one-off and time limited to help, in the first instance, protect people’s jobs, but also protect the long-term damage on our economy.

“I think those are the right things to do so that the long-term damage is minimised.

“Over the medium term, we obviously can’t live like this, everyone appreciates that, and we’ll have to return our public finances to a sustainable position over a reasonable period of time, that’s the right thing to do for the economy, not least, as we’ve seen, because things come along, and we need to be able to have the strength to respond to them.

“I will make the decisions that are required, difficult as they may be, to do that.

“I think it’s too early to say exactly what the shape of our recovery looks like, the time period over which that should happen and how it should happen, so I wouldn’t want to speculate now, but people should know I am very committed to making sure that we do that and I'm unafraid to make whatever difficult decisions are required."

When asked again about tax increases, he said: "I wouldn't want to speculate on the shape of the future.

"We all want to see strong public finances. This is hopefully a one-off situation that's required a particular response to try and minimise the damage.

"Once we get through it and we're more back to normal then we need to have more normal public finances over time.

"That won't obviously happen overnight, this will take a little bit of time to recover from, but over time we need to get back to a sustainable position."

The Chancellor's summer statement on Wednesday saw the bill for tackling the coronavirus crisis rise to £190 billion, according to treasury figures.

Mr Sunak's statement contained the potential for £30 billion of extra spending on top of almost £160 billion already committed to dealing with the coronavirus emergency - a figure far higher than previously estimated - and there is little indication of how the Treasury intends to pay for it.