Labour to scrap stamp duty for first-time buyers
A Labour government would abolish stamp duty for first-time buyers when buying property worth less than £300,000, Ed Miliband will say today.
In the latest of a number of policy announcements by the major parties to deal with the UK's housing crisis ahead of the election, Miliband will pledge to do more to help young people on to the housing ladder by scrapping the tax.
Labour says the £225 million pledge – which will be funded by "tackling tax avoidance by landlords" - will see 90% of first-time buyers save up to £5,000.
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."
Stamp duty works on a sliding scale. Buyers currently pay nothing on the first £125,000 of a property's value and are then charged a rate of 2% on the next £125,000, 5% on the next £675,000, 10% on the next £575,000 and 12% on homes over £1.5 million.
In response to the news, Mark Hayward, director of the National Association of Estate Agents said: "This could be a real vote swinger for those looking to step on the housing ladder.
"Scrapping stamp duty for homes under the price of £300,000 would only mean good things for hopeful first time buyers (FTBs). For many, hidden costs such as stamp duty can be the difference between being able to afford a home, and not being able to afford one.
"Our recent research showed that just under a third of house sales were made to first time buyers, and hopefully we'll see this significantly increase over the next three years."
In addition, Miliband is expected to announce a further proposal that would give buyers that have lived in an area for more than three years the first choice of up to half the homes that are being built there, while over the weekend it pledged to reform the rental market by introducing standard three-year tenancies for tenants with rent rises capped at the rate of inflation too.
Meanwhile, the Conservatives have already announced a number of housing polices ahead of 7 May, including extending Right to Buy to 1.3 million housing association tenants in England and introducing a new 'Help to Buy Isa' for first time buyers which will see the government contribute a maximum of £3,000 to a deposit.
The Tories have also pledged to build 200,000 homes for first-time buyers aged under 40 at a 20% discount, while Labour want to build 200,000 new homes a year by the end of the next Parliament.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.