Following Labour’s landslide election victory earlier this month, we break down what the election of Labour means for first time buyers and whether there is reason for hope over the next four years.
What does this mean for interest rates?
A misconception that is often made is that a government has the power to cut or raise interest rates. This is not true. This power is in the hands of the Bank of England which is independent to the government.
However, the long-term economic forecast suggests there may be a cut in interest rates at the end of the summer. Given the continued fall in inflation and the economic stability a new government offers, things are looking promising for a cut from the 16 year high of 5.25%.
What is ‘A Freedom to Buy Scheme’?
Labour’s manifesto promise is to help more than 80,000 young people onto the housing ladder over the next five years. To do this they have promised a mortgage guarantee scheme coined ‘A Freedom to Buy’.
What does this mean? In simple terms, the scheme would support first time buyers by providing a guarantee for part of your mortgage, meaning you will not need as big of a deposit when buying a new home. This is likely to replace the current mortgage guarantee scheme which is expiring in 2025.
What about Stamp Duty?
Currently, first time buyers pay no Stamp duty land tax on properties worth up to £425,000. On any property purchase price of up to £625,000, you will pay no Stamp Duty on the first £425,000. After this first-time buyers will pay 5% on the remaining amount, up to £200,000.
This threshold commitment was made by the conservatives and will run at least until April 2025. However, labour are reviewing this position and may bring the threshold down from £425,000 to £300,000.
Although this is not official yet it’s worth bearing this in mind if you are thinking about purchasing a home in the next 12 months.
Will Labour bring back help to buy?
Labour has no intention of bringing back help to buy.
How else will labour support first time buyers?
Labour have also promised that they will support first time buyers by giving them first dibs on homes in new developments. Labour is yet to provide any further information on how this system will work but expect announcements over the next couple of weeks.
Looking for a way to get on the property ladder?
Pocket offers affordable discounted homes exclusively for local city-makers, providing an opportunity for those on moderate incomes to get their foot on the property ladder and own a piece of the city they love. Our homes are unique and we sell our homes to first time buyers at a discount of at least 20% to other one-bedroom flats in the area. Pocket is an alternative to shared ownership, there is no rent payable on these homes, and you will own 100% from day one.