Ed Miliband pledged to help first-time homebuyers and favor local ownership by scrapping the levy on some purchases and raising taxes for foreign property investors if his U.K. Labour Party is elected on May 7.
First-time buyers won’t have to pay stamp duty on homes valued at less than 300,000 pounds ($455,000) for the first three years of a Labour government as part of a bid to tackle Britain’s “modern housing crisis,” Miliband, 45, said in a speech Monday in Stockton-on-Tees, northeast England. British buyers will have the first opportunity to buy half of the new homes built in an area if they’ve lived there for more than three years, he promised.
That stamp-duty exemption would be partly funded by raising taxes paid by companies that buy U.K. property for foreign investors and by increasing stamp duty for homebuyers from outside the European Union. Local councils will also be allowed to as much as double the tax they charge on homes that have been left empty for one year, Miliband said.
“There’s nothing more British than the dream of home ownership, starting out in a place of your own,” Miliband said. “But for so many young people today that dream is fading with more people than ever renting when they want to buy, new properties being snapped up before local people get a look-in, young families wondering if this country will ever work for them.”
Affording a Home
Miliband’s announcement challenges Prime Minister David Cameron’s attempt to position his Tory party as the champion of home ownership. With lack of supply, and demand from foreign buyers stoking U.K. property prices, the housing market has become an election battleground for both parties, as Britons increasingly struggle to afford a home. Miliband’s promise to focus on first-time buyers follows a pledge by Cameron earlier this month to extend right-to-buy to housing-association tenants, a move that could benefit 1.3 million people.
Miliband’s proposal to abolish the stamp duty could save first-time buyers as much as 5,000 pounds, according to Labour. Tackling tax avoidance by landlords would also help fund the measure -- expected to cost 225 million pounds a year. Homebuyers start paying the levy over 125,000 pounds of a property’s value.
Local ownership will be encouraged by making it illegal to advertise homes for sale abroad first, he said, as well as reiterating Labour’s pledge to build a million homes over Parliament’s next term.
More than a third of properties in central London have been bought by overseas buyers, Labour said, while average house prices have risen to eight times the average wage and twice as many properties are bought by buy-to-let landlords or cash buyers than first-time buyers.
“The number of affordable homes being built has fallen every year under this government,” Miliband said. “And now we have the lowest level of home ownership for a generation.”
A report by Rightmove Plc last week showed asking prices for U.K. property climbed to a record in April as a shortage of homes for sale worsened. The average price rose 1.6 percent from March to 286,133 pounds, reflecting a 4 percent plunge in the number of new sellers this year compared to 2014.
“We will make sure there is real priority for first-time buyers because it is no good people seeing houses going up in their community, if they are then not able to buy them because they are snapped up by investors from overseas,” Miliband said. “In the Britain we believe in, houses should be lived in by families, not just set aside for speculators.”
As well as extending right-to-buy, potentially allowing more than a million tenants the opportunity to purchase their home, the Conservatives have introduced a number of measures to boost property ownership.
In December, Tory Chancellor George Osborne introduced reforms to the stamp-duty system, making it cheaper for 98 percent of buyers. His government also introduced the Help-to-Buy plan to allow first-time buyers to acquire homes with as little as a 5 percent deposit and introduced a tax on future capital gains for non-resident sellers of U.K. property.