Labour to introduce mortgage guarantee scheme to grant young people ‘freedom to buy’

Labour to Announce “Freedom to Buy” Scheme and Overhaul of Planning System as Part of Election Pledge

On Friday, the Labour party will unveil its “freedom to buy” scheme, promising to make it easier for young people to get on the housing ladder. This announcement comes as part of their election pledge, with the party vowing to make the existing mortgage guarantee scheme a permanent fixture if they win the election on 4 July.

In addition to the “freedom to buy” scheme, Labour leader Sir Keir Starmer will also commit to an overhaul of the planning system. This includes reintroducing housing targets and other measures that aim to see 1.5 million new homes built in the next five years.

Sir Keir will state, “After 14 years of Conservative government, the dream of home ownership is out of reach for too many hard-working people. Despite doing everything right, they can’t move on and up. A generation faces becoming renters for life. As prime minister, I will turn the dream of owning a home into a reality.”

However, the Conservative party has criticized Labour’s plans, citing their promise to raise taxes by over £2,000 to pay for their policies. Tory chief secretary to the Treasury Laura Trott stated, “The truth is, Labour’s tax raid will punish first-time buyers. What’s worse, their refusal to back our Family Home Tax Guarantee is the strongest signal yet that your home is next in Labour’s tax grab.”

The mortgage guarantee scheme, first introduced by the Tories in 2021, was created to help buyers with a 5% deposit, which became scarce during the pandemic. By acting as a guarantor for buyers and covering some costs in case of repossession, the scheme aims to encourage lenders to offer deals for smaller deposits and assist those who can afford mortgage payments but struggle to save large sums while renting.

However, the scheme is temporary and set to end in 2025. Labour’s pledge is to make it a permanent offer, which they claim will help over 80,000 young people “get out of their parents’ house” and purchase their own home in the next parliament.

As part of their proposed changes to the planning system, Labour plans to tax foreign buyers who are “pricing out young people” from the housing market. The revenue will be used to hire new planning officers and facilitate more housing projects. They also aim to bring back house-building targets, fast-track permissions for building on brownfield sites, and reform compulsory purchase orders to prevent speculators from interfering with housebuilding.

Labour’s policy announcements have been welcomed by industry experts, including Berkeley Homes and Barratt Developments. The Institute for Fiscal Studies (IFS) also supports the party’s plan, stating that it has “the potential to reduce one of the barriers to homeownership” by assisting those with smaller deposits. However, the IFS also notes that having a deposit is only one hurdle, and potential buyers also need to have a high enough income to afford a mortgage.

Meanwhile, the Conservative party is announcing a new plan to raise the income threshold for high-income child benefit tax. Instead of having to pay the tax when either parent earns more than £60,000 a year, it will now only apply when the household income exceeds £120,000.

The Liberal Democrats are also focusing on parents, promising to “transform” parental leave by doubling statutory maternity pay and offering a “dad month” of paid leave for new fathers.

Deputy Labour leader Angela Rayner, who has spearheaded the party’s housing policies, stated, “The Tories have crashed housebuilding, putting the dream of a safe, secure, and affordable home further out of reach. Rishi Sunak is too weak to deliver the change our country needs. Labour’s new Freedom to Buy scheme will deliver for working people across the country. We will deliver more action on housing in the first year of a Labour government than this crumbling Conservative government has managed in over a decade.”

The general election on 4 July will be a crucial moment for the future of housing in the UK, as different parties present their plans to address the housing crisis and make homeownership more attainable for young people.

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