The major political parties have set out their housing policies if they are elected next month.
The Liberal Democrats are the latest to show their hand in the For a Fair Deal Manifesto 2024. The party has pledged to ‘build the homes people desperately need’ by expanding neighborhood planning across England; building ten new garden cities and allowing councils to purchase land for housing on the basis of current use value rather than hope value, by reforming the Land Compensation Act 1961.
Labor has promised to get more young people into the housing market through its purchasing freedom programme.
If Labor wins the July 4 general election, lenders will offer mortgages with a 5% deposit, with the government guaranteeing part of a home loan.
It makes permanent the Conservative government’s mortgage guarantee scheme, which was introduced in 2021. Labor says the plan will help more than 80,000 young people onto the property ladder over the next five years.
Then we have the Conservative Party’s plan to boost home ownership among young Brits by cutting stamp duty for first-time buyers. The £425,000 threshold for first-time buyers was initially increased from £300,000 on a temporary basis, and the party now wants to make this permanent.
The initiative aims to address the housing affordability crisis and stimulate the real estate market, with the hope that the tax promise will benefit approximately 200,000 households annually.
According to Cornerstone Tax group chairman David Hannah, reforms to stamp duty thresholds, rather than looking at interest rate cuts, would be essential to get the bottom end of the housing market moving in the long term.
“SDLT payment bands are long overdue as they have never been indexed to house price inflation. Raising these thresholds would stimulate activity at the lower end of the property market and allow first-time buyers to reduce the amount they need to borrow, improving their affordability calculations.
He added: “As we all know, a rising tide lifts all boats. Those looking to purchase properties in the mid to high end of the real estate market will now have the opportunity to sell their properties in the lower end as a result of the increase in demand from potential buyers, contributing to further momentum on the housing market.”
However, Marchwood IFA mortgage broker James Gordon has been largely unimpressed by the party promises made so far.
“To be honest, I’m quite cynical about everything to do with politics. As for the Lib Dems, I mean: brilliant, well done guys. They can say whatever they want because ultimately they will never be held accountable or have to do anything.
“Conservatives keeping the threshold at £425,000… I think this is a good thing, but again, that’s only until they decide not to. I think that at some point that threshold will (and will have to be) increased to get the market moving again.
As for Labour’s permanent mortgage guarantee scheme: “Along the lines of help-to-buy? To be honest, I’m not sure Help to Buy has been a great plan. Even though it is a little more complicated, we are generally more fans of shared ownership.”
Mortgage broker Lewis Shaw of Shaw Financial Services is also unimpressed by the party’s commitments so far.
“Parties that try to bribe potential first-time buyers will fail to address the issues at the heart of the housing crisis. Real economic changes need to happen before their pie-in-the-sky ideas can go anywhere. Every political party promises to build millions of homes and never succeeds, so why should anyone pay attention to these promises?”
“That won’t happen and all this results in more apathy towards politicians. They need to stop crying and be honest. The economy is broken, housing is broken, and there is no easy or quick fix.”
Daniel Watson, director and mortgage broker of Kerr & Watson, says the Conservatives’ pledge to maintain the stamp duty threshold for new buyers at £425,000 is generally seen as positive, potentially easing the financial burden on first-time buyers illuminated. However, he argues that it fails to address the fundamental problems of high house prices and affordability.
“Labour’s plan to make the mortgage guarantee scheme permanent aims to help buyers with low deposits. But since many lenders already offer 5% deposit options. The consensus is that while this policy shows Labour’s intention to support first-time buyers, it does not address the wider affordability crisis. High mortgage rates and house prices remain significant barriers that cannot be overcome with a low deposit system alone.
What about the liberal Democrats who have proposed building ten new garden cities and introducing a new Rent to Own model?
“These ideas reflect a more innovative approach, aimed at increasing housing supply and providing alternative routes to homeownership. However, skepticism remains about the feasibility and potential impact of these plans, especially without substantial incentives for housebuilders.”
He concluded: “The announcement of the general election has significantly increased demand for property. Despite high house prices and interest rates, we have seen an increase in applications, likely due to pent-up demand and tenants trying to escape high rents. Historical trends also indicate that mortgage approvals tend to increase around elections.
“However, I am concerned that proposed policies from all parties lack the bold innovation needed to solve long-term housing problems. There is a call for more ambitious plans that include not only targets but also practical incentives for housebuilders to create affordable homes.”