Labour Unveils ‘Freedom to Buy’ Scheme and Major Housing Reform in Bid to Empower Young Homeowners Amidst Tory Criticism

Labour plans to introduce a 'freedom to buy' initiative aimed at assisting young individuals through a mortgage guarantee program. Additionally, the party promises to construct 1.5 million new homes and reform the planning system to accelerate housing solutions. However, the Conservatives criticize Labour’s plan, arguing that it constitutes a "tax raid" that will adversely affect first-time homebuyers.

Political journalist @NifS

Friday, June 7, 2024, 06:

On Friday, Labour is set to unveil its "freedom to buy" initiative, pledging to help more young individuals become homeowners.

The party has committed to establishing the current mortgage guarantee program, where the government serves as a guarantor for individuals who struggle to accumulate large down payments, as a permanent policy if it is victorious in the upcoming July 4th election.

Sir Keir Starmer plans to revamp the planning system, which includes bringing back housing goals. He believes his policies will result in the construction of an additional 1.5 million homes within the next five years.

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"He will assert that after 14 years under Conservative rule, the aspiration to own a home has become unattainable for numerous diligent individuals."

"Even though they've done everything according to the book, they're unable to progress and ascend. A whole generation is at risk of being perpetual tenants.

"My parents' house provided them with stability and served as a cornerstone for our family. As prime next minister, I am committed to making homeownership a achievable dream for everyone."

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While advocating her party's frequently criticized assertion that Labour intends to increase taxes by more than £2,000 in the upcoming parliamentary term to fund their initiatives, Conservative chief secretary to the Treasury Laura Trott stated, "The reality is that Labour's tax hike will burden first-time homebuyers.

"Their rejection of our Family Home Tax Guarantee is the clearest indication that Labour plans to target your home next in their taxation efforts."

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The mortgage guarantee program was initially launched by the Conservative Party in 2021, following the near elimination of 5% deposit mortgage offers in the aftermath of the pandemic.

The program supports potential homeowners by acting as a guarantor and absorbing certain expenses should the property be foreclosed. This initiative motivates financial institutions to provide mortgages with lower down payments and assists individuals who can manage regular mortgage payments but find it challenging to accumulate significant savings due to rental expenses, in purchasing their initial homes.

Nonetheless, the program is designed as a short-term measure and is scheduled to conclude in 2025.

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The Labour Party has committed to solidifying the program as a constant fixture, asserting that it would assist more than 80,000 young individuals in moving out of their family homes and purchasing their first properties during the forthcoming legislative term.

In the proposed reforms, the party pledges to impose taxes on overseas buyers who are making housing unaffordable for younger generations. The revenue generated from this tax will be used to fund additional planning officers. According to the party, this will accelerate the approval process for new developments.

The plan will reinstate residential construction goals, which were eliminated by the Conservatives in 2022. Additionally, it will accelerate approvals for development on previously used land and modify compulsory purchase laws to prevent speculators from hindering the construction of new homes.

They will additionally commit to providing local residents with priority access to new housing projects and reaffirm their vow to establish "the next generation" of new towns.

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Deputy Labour leader Angela Rayner, who oversees the party's housing strategies, stated, "The Tories have severely hindered housebuilding, pushing the prospect of acquiring a safe, secure, and affordable home even further away. Rishi Sunak lacks the strength to bring about the necessary changes our nation requires.

"Labour's latest initiative, the Freedom to Buy plan, promises to benefit working individuals nationwide. In the initial year of a Labour administration, we plan to achieve greater progress in housing than what the faltering Conservative government has accomplished in the past ten years."

The unveiling of the new policies received positive reactions from several sector specialists, notably from Berkeley Homes and Barratt Developments.

The Institute for Fiscal Studies (IFS) commented that the party's proposal could potentially lower one of the obstacles to owning a home by assisting individuals who have less money saved for down payments.

David Sturrock, a senior research economist, pointed out that securing a deposit is merely the initial challenge. He emphasized that potential buyers must also earn enough to qualify for a larger mortgage and manage the ongoing payments.

Consequently, prospective purchasers, particularly those in their 30s from affluent origins aiming to buy homes beyond London and the South-East, stand a better chance of benefiting from this initiative.

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In recent developments, the Conservative Party is unveiling a proposal to increase the income level at which parents begin to incur the higher-rate child benefit tax.

Now, the charge will only apply when the combined household income exceeds £120,000, instead of the previous threshold of £60,000 per individual parent.

The Liberal Democrats have plans to target parental benefits by revolutionizing parental leave, proposing to double the duration of statutory maternity pay and introducing a "dad month" of paid leave specifically for new fathers.

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