What Are Labour’s Plans for Mortgages, Housing, and First Time Buyers?
by Megan Addy – Director | Independent Mortgage & Protection Adviser @ Prism Mortgage & Protection Advice
The Labour Party has swept to power in a landslide general election victory, meaning they can now start working towards putting some of their manifesto pledges into action. Here’s a breakdown of Labour’s plans for mortgages, housing, and First Time Buyers.
“Keeping Mortgage Rates Low”
Labour have pledged to “keep taxes, inflation and mortgages low”, and to not repeat “the mistakes of the past”, including the 2022 mini-budget by Liz Truss, which resulted in spiralling borrowing costs. Labour’s manifesto emphasised economic stability through tough financial rules and smart economic decisions which, they say, will help to “keep rates low”.
Before the general election was announced, a gradual reduction in the Bank of England base rate and mortgage rates had been expected as inflation was recently curbed. While it’s highly unlikely we’ll see mortgage rates return to their pre-mini-budget levels, I’m sure Labour would welcome a reduction in interest rates as ‘evidence’ that their economic plan is working.
Support for First Time Buyers
Labour has pledged to introduce their “Freedom to Buy scheme”. Although information about this scheme is currently limited, it appears to be a permanent continuation of the current mortgage guarantee scheme. This scheme aims to help First Time Buyers secure mortgages with lower deposits. By increasing the availability of 95% Loan To Value mortgages, Labour aims to support 80,000 young people to get on the property ladder over the next five years.
Tackling the Housing Crisis
Labour’s commitment to tackling the housing crisis includes an ambitious plan to build 1.5 million new homes over the next parliament, ensuring “young people” have “first dibs” on homes in new developments. This initiative also includes increasing the Stamp Duty surcharge on foreign buyers to fund new planning officers, facilitating faster approval of new housing projects.
They plan to update the National Policy Planning Framework to relax planning rules and boost housebuilding. Their aim is to use previously developed land (brownfield sites) and “low-quality green belt areas” (grey belt) for new homes. They have also pledged to make 50% of new homes built on grey belt land affordable. This includes that are to be let at least 20% below local market rates.
Labour’s Goals for a Sustainable Future
Labour’s housing strategy aligns with their broader environmental goals. They aim to make all private rental properties achieve an EPC C rating by 2030 and plan to deliver a national Warm Homes Plan to eliminate fuel poverty by 2030. This plan includes grants and low-interest loans for insulation and other energy efficiency improvements.
Conclusion
Labour’s victory in the general election could mean big changes for housing are on the horizon. They plan to “keep mortgage rates low,” help First Time Buyers with the “Freedom to Buy scheme,” and build 1.5 million new homes. In addition, their plans to improve the energy efficiency of our homes could have a positive impact on a sustainable future and reduce our bills. However, it’s likely their plans to develop both grey and green-belt areas will be met with some opposition from those concerned about the impact on nature and our landscapes.
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