Ed Miliband today announced in a speech in Stockton what the housing priorities of a future Labour government would be.
The Labour leader said first-time buyers (FTBs) will be the focus of his party’s policies and underscored the importance of local people having the chance to buy a new home in their own communities.
The key points in Labour’s new housing pledge are:
STAMP DUTY
For the first three years of the next Labour government, the party will reduce stamp duty to zero for first-time buyers of homes worth up to £300,000. This relates to savings of as much as £5,000 for 9 out of 10 people seeking to get on the property ladder, Miliband said.
He stressed that this would be paid for not by more borrowing or taxes increases. The savings from stopping tax avoidance by landlords would raise £500 million a year, Miliband said, citing HMRC figures. Identifying rogue landlords who claim tax relief and cracking down on individuals buying properties through corporations to avoid stamp duty, would also free up more money.
LOCAL HOMES FOR LOCAL PEOPLE
1. Labour will 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.
Miliband underscored the importance of offering local people the chance to get to local properties first, instead of letting outside buy-to-let landlords “snapping up” the newly-built properties.
“When planning permission is granted in a local community, it is the local community that should and will benefit under a Labour government,” Miliband stated.
2. Labour will stop foreign buyers buying up properties before local buyers get a look in by ensuring they are advertised in local areas, increasing taxes paid by foreign buyers and council tax for empty homes.
MORE NEW HOMES
Labour plans to start construction on one million new homes by 2020, which relates to its pledge of building 200,000 homes annually. The party will put pressure on developers through a “use or lose it” policy, aimed to ensure that they will build on land rather than keeping it undeveloped via the right to levy council tax.
Labour also has plans for a series of new garden cities and wider reform of the housing market.
The party’s plan includes the construction of more affordable homes by prioritising capital investment and allowing its £5 billion Future Homes Fund to invest in housing associations developing affordable housing.
ACTION ON RENT
Miliband also mentioned Labour’s pledge to secure three-year tenancies for those who want them and cap rents so they cannot rise by more than the rate of inflation during this period.
Labour has received a lot of criticism from the industry in regard to this plan as many believe it would do more harm than good to the private rented sector (PRS).
⇒ In its monthly PRS Report for March released today the Association of Residential Letting Agents (ARLA) says that almost three-quarters (74 per cent) of its members do not believe that tenants would actually benefit from the proposed three-year tenancy agreements with rent controls and strict rules to make it more evictions more difficult. This would only see a reduction in landlords and therefore supply of rental housing.
“Labour’s proposals aren’t necessarily the solution. If you put a cap on rent increases above inflation, tenants are likely to experience automatic annual hikes. Whereas, in reality, landlords appreciate good tenants and would avoid raising rents to retain them. Our March report shows that the average time tenants stayed in a property is 17 months and a third (31%) of agents reported that they had successfully negotiated a rent reduction for tenants. So, if this law comes into play, instead of tenants getting a potential reduction, they may be more vulnerable to automatic increases,” David Cox, managing director of ARLA said.
⇒ Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors (RICS), commented:
“A welcome move away from the arbitrary rent caps announced last May, but Labour’s rent control proposals risk undermining the PRS by failing to take a holistic look at inflation, market value and the living wage across the whole of the UK.
Capping rent inflation through three-year fixed tenancies is likely to impact investment into the existing quality of homes in the PRS and could force smaller landlords to exit the market – limiting supply at a time when the UK faces a chronic shortage of homes across all tenures.
The PRS has a vital role to play in the supply-side equation of the housing crisis and transparent landlord fees and fairness for tenants are already at the heart of the existing voluntary Private Rented Sector Code of Practice.
However, this code lacks the ‘statutory teeth’ to be enforced across the whole of the rented sector and the next government needs to address this if we are to fulfil our commitment to more and better quality homes.”
⇒ London-based estate agency Chestertons has also warned that changes to landlord legislation including national registration schemes, extended minimum tenancy terms and even direct rent controls could backfire.
“While we welcome the aim of a fairer, more transparent and accessible rented sector, the main factor behind rising rents is that the available supply of good-quality homes is being outstripped by rising demand. If a lot of new legislation is imposed on landlords quickly and without proper consultation, there is a real danger that properties may actually be withdrawn from the market, which will only serve to exacerbate the very problems the new laws seek to address,” Robert Bartlett, group CEO of Chestertons, said.
⇒ John Goodall, chief exectuive of peer-to-peer mortgage lender Landbay, had this to say about Labour’s announcement on enforcing rent controls within a tenancy:
“Since the advent of modern buy to let lending, rents have actually fallen after the effects of inflation. Our research shows rents in the private rental sector are now 15% lower in real terms than in 1996.
“Rent control is a cynical political move that won’t help tenants – or provide a single extra home to let.
“Progress could be put at risk by this well-intentioned but simply unworkable policy. Labour’s rent controls are clearly aimed at landlords. But tenants would be caught up in the crossfire.
“Investment into the private rental sector would be stifled and supply choked off further. Those lucky enough to afford to rent will find themselves in properties with slipping standards – as competition between landlords fades away.”
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