Miliband pledges Stamp Duty holiday for first-time buyers

First-time buyers will benefit from a stamp duty holiday on homes up to £300,000 under Labour, Ed Miliband will announce today.

Higher taxes will be imposed on foreign buyers and up to half of new homes will be earmarked for local residents trying to get a foot on the property ladder as part of the Labour leader's plans to tackle the "housing crisis".

Cutting stamp duty to zero would benefit nine out of 10 people buying their first home and could save up to £5,000, according to Labour.

The plan would cost £225 million a year, which it says would be found through a series of tax-related measures.

Housing has been one of the key battlegrounds of the election campaign with the Conservatives refreshing the Thatcherite right to buy policy in an attempt to win over voters struggling to enter the property market.

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Labour has accused the Tories of presiding over the lowest levels of housebuilding in peacetime since the 1920s with home ownership at its lowest level in 30 years.

Average house prices have risen to eight times the average wage and more than one third of central London properties have been snapped up by overseas buyers, the party said.

In a speech in Stockton, Mr Miliband will 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."

Under the plans, Labour will change planning laws to introduce a "first call" policy that would give first time buyers who have lived in an area for more than three years priority on up to half of local new homes.

It will also introduce a "local first" policy that would stop properties being advertised overseas before they have been in the UK.

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Chancellor George Osborne allowed a two-year holiday on stamp duty, which raised the threshold for first-time buyers to £250,000, to expire in March 2012, introducing a New Buy Guarantee in its place.

Buyers currently pay nothing on the first £125,000 of a home's value and are then charged on a sliding scale, starting with 2% on the next £125,000 and 5% on the following £675,000.

Labour says it would fund the stamp duty plans by tackling tax avoidance by landlords, pointing to HMRC figures that estimate it costs £550 million a year.

It claims introducing a national register of landlords would mean that figure could be cut by 20%, bringing in £100 million for Treasury coffers.

Holding companies that buy properties for investors would be hit by increases to the annual tax on enveloped dwellings while buyers from outside the European Union would be hit by a hike in their stamp duty bills of at least 3%.

Tax relief for landlords to cover the upkeep of furnished properties would also be reduced for rogue landlords that rent out sub-standard properties.

Mr Miliband will say: "It is simply too expensive for so many young people to buy a home today, saving up for the deposit, paying the fees and having enough left over for the stamp duty. So we're going to act so we can transform the opportunities for young working people in our country.

"For the first three years of the next Labour government, we will abolish stamp duty for all first time buyers of homes under £300,000.

"We will start construction of one million homes over the next five years, so at least 200,000 homes a year are getting built by the end of the Parliament with a new generation of towns, garden cities and suburbs, unlocking land being hoarded by large developers, telling them either you use the land, or you lose the land.

"We will make sure there is real priority for first time buyers because it is no good people seeing houses going up in their community, if they are then not able to buy them because they are snapped up by investors from overseas.

"So with Labour, first time buyers who have lived in an area for more than three years will have first call on up to half of all the new homes built in their area. Because in the Britain we believe in houses should be lived in by families, not just set aside for speculators.

"We're going to have fairness for those who rent their homes too with three year stable tenancies and a real cap on how much rents can rise in that time, set at no more than inflation. So that people can enjoy real security in the place they live."

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Labour has already pledged a series of measures to kick start house building, including plans to build one million new homes by 2020 and "use or lose it" powers to stop developers landbanking.

Local authorities will be able to charge 100% more council tax on any homes that have been left empty for one year.

Mr Miliband also yesterday announced measures to tackle problems in the rental market by introducing rent controls.

Shadow chancellor Ed Balls said: "A Labour Treasury after the election will tackle the housing crisis and back young people aspiring to buy their own home.

"Our fully-funded plan will slash stamp duty to zero for first time buyers on properties up to £300,000. This will save money that can instead be put towards a deposit and all the other costs that mount up when you buy a home.

"And we'll get more affordable homes built too, with the biggest house-building programme in a generation.

"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."

A Conservative spokesman said: "This panicky, unfunded announcement is something Labour have tried before - and it failed. Coming from the people who crashed the housing market and repeatedly raised stamp duty, this won't distract from Ed Miliband's inability to say what deals he will make with the SNP to prop him up in Downing Street.

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"In contrast to Ed Miliband's gimmicks, because of our balanced economic plan, we've been able to deliver lasting reforms - cutting stamp duty for 98% of people who would have paid it.

"Higher borrowing and higher debt under an SNP-controlled Ed Miliband government would mean higher mortgage rates and fewer first-time buyers."

A Liberal Democrat spokesman said: "This is yet another unfunded promise from Labour. Just last week, the independent Institute for Fiscal Studies told them they weren't being honest about their spending plans. It is clear they have learnt absolutely nothing.

"No-one should trust Labour to deliver this commitment because their sums simply do not add up. The Liberal Democrats have been honest about our spending plans; it's time Labour and the Tories did the same.

"Only the Liberal Democrats will really help people get on the housing ladder, by building the 300,000 homes needed to keep up with demand, helping young people afford the deposit for their rent, and helping people buy their homes over time through our Rent to Own plans."