The cost of the Labour Party’s pledge to abolish stamp duty for all first-time buyers of homes worth under £300,000 will be covered by a clampdown on overseas property investors and rogue landlords.
Just 10 days before the nation goes to the polls, Labour leader Ed Miliband used a speech in Teesside to announce the three-year plan to help 90% of first-time buyers by saving them up to £5,000 on the cost of a property.
He said: “It is simply too expensive for so many young people to buy a home today, saving up for the deposit, paying the fees and having enough left over for the stamp duty.
“So we’re going to act so we can transform the opportunities for young working people in our country.”
Labour’s plans, which will cost an estimated £225 million a year to implement, will be paid for by introducing a National Register of Landlords designed to tackle tax avoidance by buy-to-let investors.
Other ways to recoup the cost of the zero-rate stamp duty extension include cutting tax relief that landlords receive for repairs and upkeep when the properties they own are not up to the required standard.
Labour says “rogue” landlords who did not maintain properties “to basic standards” will lose tax relief enabling them to offset 10% of their annual rental income against falls in the value of furniture and appliances.
Miliband has also pledged to:
- Allow local authorities to charge 100% more council tax on homes that have been left empty for one year to discourage “buy to leave”
- Charge developers council tax on proposed homes where land has been banked for five years without being built on.
- Increase the amount of tax paid by holding companies that buy UK property on behalf of investors.
- Raise the amount of stamp duty paid by property investors from outside the EU by at least 3%. On top of that, overseas investors will be prevented from purchasing UK properties before they have been advertised for sale to domestic buyers.
Labour’s plans to help first-time buyers follow the announcement that if elected on 7 May the party will help tenants by extending the typical tenancy agreement from a year or less to three years, following a probationary period of six months.
Miliband has also pledged to cap rents during the course of the standard three-year tenancies so they cannot rise by more than the CPI measure of inflation – currently 0% – while allowing flexibility for them to be reduced.
Market rates will still apply at the start of a contract, but tenants will have a legal right to know what the previous tenant paid, which Labour says will put them in a stronger position to negotiate and make substantial rent rises between contracts less likely.
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