How could the Labour government help first-time buyers?
Wondering how the change in government could help you buy your first home faster? You’ve probably heard the new government intends to build more new homes, but a closer look at the Labour party manifesto reveals there could be even more help on its way.
During the election campaign, Labour made some big promises to help young people get on the property ladder, with details of the changes throughout the party’s manifesto.
So, what exactly is the new government going to do differently? We’ve given the Labour manifesto a thorough read to find out.
How does Labour intend to help first-time buyers?
Here are the few key policies Labour plans to put in place to help young people buy their first home.
1. Labour aims to build 1.5 million new homes within the next five years
One of the major promises the new government has made is that it’s looking to build 1.5 million new homes during its five-year Parliament term.
It also intends to reform the planning system by cutting down on red tape, hiring more planning officers and giving more power to local planning and development authorities. This could quicken up planning processes, which in turn can lead to more homes being built faster.
2. Labour wants to give first-time buyers first dibs on new homes
While the 1.5 million homes Labour is looking to build won’t be exclusive for first-time buyers, the new government says it’ll work with local councils to make sure first-time buyers get the chance to buy one before anyone else.
Labour is also planning to raise the stamp duty surcharge for non-residents looking to buy property in the UK, which could help give first-time buyers an advantage.
We don’t yet know how much the surcharge will change, but the aim is to bring the price up enough to stop people who don’t live in the UK buying property that could have been bought by a first-time buyer.
3. Labour wants at least 750,000 new homes to be “affordable”
Labour wants at least 50% of the proposed 1.5 million new homes to be deemed “affordable housing”.
The term "affordable housing" refers to homes for either sale or rent at least 20% below market value, as part of different government programmes to help more people own their own home. These programmes include the Shared Ownership Scheme, Rent to Buy and First Homes Scheme.
The party also mentions that it wants to make changes to the Affordable Homes Programme, which grants funding to help build affordable housing, so that more homes can be built with the the funding that’s already been provided.
4. Labour wants to make it easier for you to buy a house with a smaller deposit
Labour wants to introduce a “permanent mortgage guarantee scheme”. According to the manifesto, this scheme would help first-time buyers who are struggling to save up for a large deposit and give them access to lower mortgage costs.
However, Labour hasn't yet shared details of how this will work.
Currently, first-time buyers looking to build up a deposit can take advantage of the lifetime ISA, a savings or investment account, which comes with a government bonus to help you save for a first home.
5. Labour wants to end the leasehold system
If you’ve been thinking of buying a flat or apartment, you’ve probably heard about leaseholds.
Leaseholds are when you own your property for a limited amount of time, as you are “renting” it from the land and building owners. They usually last a very long time, up to 999 years, but they carry over when you buy a property.
Labour wants to remove the leasehold system and make the commonhold a standard practice for properties that are on shared land, such as flats. This is because leaseholds are very expensive to renew, with that renewal becoming more expensive the less time is left on the leasehold, so a property with only 80 years left, for example, can be difficult to sell.
With a commonhold, everyone owns the freehold of their own property in that building, but they also share ownership of the building and the land it sits on. There is no ground rent to pay in a commonhold and property owners get to decide together how the building is run and maintained.
How could the new government help me save a deposit to buy my first home?
There are a few other measures in the Labour manifesto that could make it easier for you to get on the property ladder.
- It wants to build green energy infrastructure that’s publicly owned, which could drive down the cost of electricity bills and leave you with more money at the end of the month to put towards your deposit.
- It wants to ban zero hour contracts and introduce better workers’ rights, such as protection from unfair dismissal. Depending on your career, this could mean better financial stability, so you might finally be able to commit to saving regularly.
- It wants to make sure the minimum wage is a “living wage”, meaning it takes into account what’s happening with inflation and the cost of living. This could cause minimum wage to go up, which could give you a pay rise.
- It also wants to ban the age bands on minimum wage. Currently, the minimum wage is lower for people under 21, so if you’re part of that age group you might see a bump in your salary – although details still need to be confirmed.
- The Renter’s Reform Bill aims to give renters more rights, including removing no-fault evictions and allowing renters to challenge their landlords about rent increases. If you’re currently renting, this could make you feel a little safer financially so you feel more able to put money away for a mortgage deposit.
Will the Labour party make changes to the lifetime ISA?
At OneFamily, we believe the lifetime ISA is key to helping more people get on the property ladder but it needs to be brought up-to-date, which is why we’re campaigning for a few important changes to be made.
But, as yet, the new government hasn’t announced any changes to the lifetime ISA, although there have been rumours that it could be changed.
If you are using a lifetime ISA to save for your house deposit, don’t worry, it’s very unlikely that any changes will get in the way of your plans. When the Help to Buy ISA was replaced by the lifetime ISA, it remained available with the same rules for people who already had one. Many people chose to transfer to a new lifetime ISA though because of the way the bonus is paid.
Lifetime ISAs give you a 25% government bonus on everything you save or invest. You can put up to £4,000 each tax year into this type of account which means that you could get up to an extra £1,000 every tax year to go towards your first home deposit.
The catch is that if you use the money in your lifetime ISA for anything other than buying your first home (before you're 60 years old), you’ll have to pay a 25% penalty charge on everything you withdraw.
Ready to start saving for your first home?
Our Lifetime ISA could help! You'll gain a 25% boost from the government on top of your savings, as well as any potential stocks and shares returns.
The OneFamily Lifetime ISA invests in stocks and shares. This means that while your money has good potential to grow, the value of your investments could go down as well as up, meaning you could get back less than you've put in.
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