Labour pledges stamp duty cut

Labour leader Ed Miliband
Labour leader Ed Miliband
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STAMp duty will be abolished for thousands of first time buyers, Labour will today pledge.

Ed Miliband will set out Labour support for first time buyers today with a promise to reduce to zero stamp duty on homes worth up to £300,000, handing some people a saving of up to £5,000.

The duty pledge is part of a three-pronged approach to housing.

Labour started the week with a repeat of a pledge to introduce rent caps and force through three-year contracts, a move some warned would actually increase rents with landlords opting for sudden long term rent increases to get around the ban.

Alongside the stamp duty and rent announcements, Labour will also announce plans to give first time buyers that have lived in an area for more than three years “first call” on up to half of homes built in their area.

In a speech in Stockton Mr Miliband is expected to say: “There’s nothing more British than the dream of home ownership, starting out in a place of your own.

“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.

“That is the condition of Britain today, a modern housing crisis which only a Labour government will tackle.”

It is thought the stamp duty changes would cost £225m a year, funded partly by increasing the tax paid by holding companies that buy UK property on behalf of investors and raising stamp duty on foreign buyers from outside the EU by at least 3 per cent.

Ed Balls backed Mr Miliband, saying: “A Labour Treasury after the election will tackle the housing crisis and back young people aspiring to buy their own home.”

The shadow chancellor added: “The Tories have totally failed to deal with the housing crisis. Only a Labour government in two weeks’ time will turn this round with a plan to build more homes, back renters and give aspiring first-time buyers a leg up the ladder.”

Senior Tories dismissed Labour’s plans for rent controls as “drivel” which would suppress house building and see rents artificially inflated in advance, and spike every three years - insisting such market interventions had been ridiculed by economists.

Communities Secretary Eric Pickles quoted one - Assar Lindbeck - as saying: “Rent control appears to be the most efficient technique presently known to destroy a city except for bombing.”

And there was a stark warning from Generation Rent director Alex Hilton.

“Stopping landlords from making inflation-busting rent increases would make private renters more secure than they are in today’s wild west lettings market,” he said.

“But the proposals are still riddled with loopholes.

“Landlords can still kick out tenants after six months, they can still evict tenants by claiming they need to sell, and because there are no controls on rents between tenancies, that gives them an incentive to use those loopholes.”

The proposed reforms were welcomed by homelessness charity Shelter, which said that the current rental market was “not fit for purpose” because of short-term contracts, sudden rent rises, and huge lettings fees.

But introducing rent control was called “a stunningly bad idea that could clobber renters” and “devastate” cities, by the free-market Adam Smith Institute think tank.