Labour to offer ‘freedom to buy’ for young people with mortgage guarantee scheme

Labour to offer ‘freedom to buy’ for young people with mortgage guarantee scheme
  • PublishedJune 9, 2024

The party will also pledge to build 1.5 million homes and overhaul the planning system to deliver more action on housing. But the Conservatives say Labour’s “tax raid” will “punish first-time buyers”.

Labour is promising to get more young people on the housing ladder as it announces its “freedom to buy” scheme on Friday.

The party is pledging to make the existing mortgage guarantee scheme – which sees the government act as a guarantor for people unable to save big deposits – into a permanent fixture if it wins the election on 4 July.Sir Keir Starmer is also committing to an overhaul of the planning system, including reintroducing housing targets, claiming his measures will see 1.5 million more homes built over the next five years.

“After 14 years of Conservative government, the dream of home ownership is out of reach for too many hard-working people,” he said.

“Despite doing everything right, they can’t move on and up. A generation faces becoming renters for life.

“My parents’ home gave them security and was a foundation for our family. As prime minister, I will turn the dream of owning a home into a reality.”

But touting her party’s much-maligned claim that Labour will raise people’s taxes by over £2,000 in the next parliament to pay for their policies, Tory chief secretary to the Treasury Laura Trott said: “The truth is, Labour’s tax raid will punish first-time buyers.

“What’s worse, their refusal to back our Family Home Tax Guarantee is the strongest signal yet that your home is next in Labour’s tax grab.”

The mortgage guarantee scheme was first introduced by the Tories in 2021 after offers for mortgages with a 5% deposit all but disappeared post-pandemic.

By offering to be a guarantor for buyers and covering some of the costs if a home gets repossessed, the scheme both encourages lenders to offer deals for smaller deposits and helps those who can afford monthly mortgage payments but struggle to save large sums while renting into their first home.

However, the scheme is only a temporary one and is due to come to an end in 2025.

Labour’s pledge is to make the scheme a permanent offer, claiming it would help over 80,000 young people “get out of their parents’ house” and buy their own home over the next parliament.

Among the planning changes, the party will promise to tax foreign buyers “pricing out young people” from the housing market in order to pay for new planning officers, which it claims will help increase projects being signed off.

It will bring back house-build targets – scrapped by the Tories in 2022 – as well as fast-track permissions to build on brownfield sites, and reform compulsory purchase orders to “stop speculators frustrating housebuilding”.

They will also promise to offer “first dibs” on new developments to local people looking for a home and reiterate their pledge to create “the next generation” of new towns.

Deputy Labour leader Angela Rayner, who has led on the party’s housing policies, said: “The Tories have crashed housebuilding, putting the dream of a safe, secure and affordable home further out of reach. Rishi Sunak is too weak to deliver the change our country needs.

“Labour’s new Freedom to Buy scheme will deliver for working people across the country. We will deliver more action on housing in the first year of a Labour government than this crumbling Conservative government has managed in over a decade.”

Keir Starmer and Angela Rayner during a visit to a housing development in the Nightingale Quarter of Derby.
Pic: PA
Image:Labour’s Sir Keir Starmer and Angela Rayner will make their housing announcement on Friday. Pic: PA

The policy announcements were welcomed by a number of industry experts, including Berkeley Homes and Barratt Developments.

And the Institute for Fiscal Studies (IFS) said the party’s plan had “the potential to reduce one of the barriers to homeownership” by helping those with smaller deposits.

But one of their senior research economists, David Sturrock, said getting a deposit was “only one hurdle”, adding: “Prospective buyers also need to have a sufficiently high income to take out a (bigger) mortgage and afford the repayments.

“As a result, potential buyers who are in their 30s and from better-off backgrounds and who are looking to buy outside of London and the South-East are more likely to be able to take advantage of this scheme.”

Meanwhile, the Conservatives are announcing a new plan to raise the threshold where parents start paying high-income child benefit tax.

Rather than it having to be paid when either parent earns more than £60,000 a year, it will now only be paid when a household income is over £120,000.

The Liberal Democrats will also focus on parents, promising to “transform” parental leave by doubling statutory maternity pay and offering a “dad month” of paid leave for new fathers.

SOURCE: SKYNEWS

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