The Conservative’s would resurrect Help to Buy if they win the general election, according to the party’s 2024 manifesto.
This relaunched scheme would “provide first-time buyers with an equity loan of up to 20 per cent towards the cost of a new build home” with a five per cent deposit on “interest terms they can afford”.
The scheme would be “part funded by contributions from house builders”.
Help to Buy originally launched in 2013 under then-chancellor George Osborne.
It offered a five-year interest-free loan of 20 per cent of the property value if first-time buyers put down a five per cent deposit.
The scheme, which only applied to new-build homes, was updated in 2016 to include London Help to Buy with a 40 per cent interest-free loan on a property up to £600,000
Simon Gerrard, Managing Director of Martyn Gerrard Estate Agents, said the manifesto demonstrated that the governing party was “devoid of imagination” and “out of ideas”.
“Reviving Help to Buy is a good idea — but it is ultimately meaningless if there are no homes to buy,” said Gerrard.
“Lowering the loan-to-value and purchase thresholds in London from £450,000 to £400,000 this time is perplexing given how much property prices have appreciated since the last scheme was launched. Offering watered-down, rehashed versions of previous policies is not going to solve the crisis we face.”
Help to Buy has been accused of driving up property prices in the capital, as housebuilders set their prices as close as possible to the £600,000 threshold. This new build premium also put buyers at risk of negative equity.
Stamp duty scrapped — for some
The Conservatives also promised to help first-time buyers by permanently scrapping Stamp Duty for first homes under £425,000.
Currently first-time buyers pay zero stamp duty on homes up to £425,000 and five per cent on the portion between £425,001 to £625,000, although this was due to end in 2025.
“This isn’t a bad idea, but it simply doesn’t go far enough,” said Gerrard.
“The Stamp Duty system in the country isn’t fit for purpose by preventing transactions, jamming the market and disincentivising older people from downsizing homes,” he added.
“If the Government reformed stamp duty to encourage downsizers, then there would be more properties suitable for young families on the market, which are also desperately needed. The tax needs a complete revamp not more tinkering around the sides.”
Ban on section 21 (again)
Section 21’s are so-called no-fault evictions where tenants can be served two months without the landlord having to provide a reason.
The Bill stumbled as landlords protested that the ban would put their property investments at risk.
“We will deliver the court reforms necessary to fully abolish Section 21 and strengthen other grounds for landlords to evict private tenants guilty of anti-social behaviour,” said the Conservative manifesto.
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said it wasn’t enough.
“Reform of the rental market should have taken place in the last Parliament,” said .
“As we said then, a balance between security for tenants and policies which retain the confidence of responsible landlords is crucial if we are to deliver much-needed homes for rent.”
One new idea for housing in the manifesto was a tax cut for landlords who sell their house to their tenants.
“To further support homeowners, we will introduce a two-year temporary Capital Gains Tax relief for landlords who sell to their existing tenants,” read the manifesto.
This could address the issue of tenants being made homeless when their landlords sells up — if tenants could afford the house after years of paying rent over saving for a deposit.
Graham Boar, Partner at accountancy group UHY Hacker Young warned this could create a loophole that’s “ripe for abuse”.
“There’s a risk that landlords selling properties will structure them as tenancies leading to sales, avoiding huge amounts of Capital Gains Tax,” said Boar.
“A landlord could also sell a property ‘on credit’ to a tenant, who could then sell it on with no gain and pay back their debt to the landlord. Either way, HMRC would miss out on huge amounts of tax.”
HMRC raised £1.7 million in Capital Gains Tax from the sale of second or further homes, most of which came from buy-to-let landlords.
“Tenants who want to become homeowners should be supported to do so,” said Beadle.
“Whilst incentivising landlords to sell to existing tenants has the potential to help, it will not reverse the damage to the rental market caused by tax hikes under recent Conservative governments.”
There was no mention in the manifesto on the tax regime changes for non-UK domiciled individuals
— aka non-doms.
Overseas investors are reportedly waiting to see which way the election goes before buying a home in London, causing prime property prices to stumble.
“Despite the Chancellor’s announcement on 6 March to abolish the UK’s non-dom regime, the Conservative manifesto is surprisingly silent on the topic, with no further information of when the changes might be introduced,” said Carol Katz, partner in Mishcon de Reya Private’s tax and wealth planning group.
“Labour’s manifesto may include more detail on their proposals, and we await its publication with interest.”
The full Labour manifesto is expected to by published this week.