Labour leader Ed Miliband is set to announce plans today to scrap stamp duty for most first-time buyer with an exemption up to £300,000 if they win next week’s general election, as the party ramps up its property policy offensive.
The move is estimated to save first-time buyers buying up to the maximum allowance £5,000. Mr Miliband also pledged that local people who had lived in an area for more than three years would have “first call” on up to half of new homes built locally.
Last year chancellor George Osborne announced that the ‘slab’ structure of stamp duty would be abolished, meaning all buyers would no longer face a substantial uptick in the tax bill when they pass thresholds at £125,000, £250,000, £500,000, £1m and £2m.
The move meant that the vast majority of buyers would see a reduction in their tax bill, but that the tax paid on a property at the £250,000 threshold, for example, was the same.
According to FTAdviser sister publication the Financial Times, Labour’s package costing £225m would be partly paid for by raising stamp duty to at least 3 per cent on non-EU foreign buyers of UK property and by increasing the annual tax on “enveloped dwellings”, or homes owned by companies.
Under Labour’s plans, money would also be raised by restricting tax relief to landlords if they fail to maintain properties.
Mr Miliband has also announced significant policies aimed at helping those renting, including plans to cap rent increases at inflation and allow tenants to have three-year contracts, following a probationary period of six months.
Estate agents will also be banned from requiring fees from tenants before they move in. Mr Miliband said his party would also give tenants the right to know what rent their predecessors had paid.
Property lobby groups and Conservatives spoke out against the Labour plans. Conservative London mayor Boris Johnson said Labour’s plans make for a “disastrous policy” that would reduce housing supply, which commentators generally agreed with.
Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors, warned that rent controls could risk undermining the private rented sector by failing to take a “holistic look” at inflation, market value and the living wage across the whole of the UK.
He said: “Capping rent inflation through three-year fixed tenancies is likely to impact investment into the existing quality of homes in the PRS and could force smaller landlords to exit the market – limiting supply at a time when the UK faces a chronic shortage of homes across all tenures.
“The PRS has a vital role to play in the supply-side equation of the housing crisis and transparent landlord fees and fairness for tenants are already at the heart of the existing voluntary Private Rented Sector Code of Practice.
“However, this code lacks the ‘statutory teeth’ to be enforced across the whole of the rented sector and the next government needs to address this if we are to fulfil our commitment to more and better quality homes.”
Rhian Kelly, CBI director for business environment, added: “Institutional investors, which are critical for building new homes, could be discouraged by plans to intervene in the rental market in this way, as it will add uncertainty - private rental market regulation must strike a balance between adequately protecting tenants and not overburdening landlords or property managers.”
Meanwhile, speaking yesterday (26 April) on the Andrew Marr Show, Mr Milband once again ruled on a deal between Labour and the Scottish National Party. He told the show: “No coalition, no tie-ins.”
In other election news, prime minister David Cameron plans to step up on campaigning on the economy with the launch of a small business manifesto today.
According to the FT, Mr Cameron is under pressure to inject passion into the Conservative campaign, as Tory candidates are complaining that he appears to “lack desire or seems distracted”.
In an attempt to address those concerns, Mr Cameron told a rally in Somerset on Sunday that he was “excited” by helping people to buy their first home, find a job or create a business.
donia.o'loughlin@ft.com
