Conservatives pledge to support first-time buyers and build 1.6m homes

The Conservatives have pledged to abolish stamp duty permanently for homes up to £425,000 for first-time buyers and to introduce a “new and improved” Help to Buy scheme.

Stamp duty applies in England and Northern Ireland, with different property taxes applying in Wales and Scotland.

The “nil” stamp duty band for first-time buyers was previously raised from £300,000 to £425,000 and this was due to end in March next year.

Buyers can currently claim relief if the property is their first home.

This means paying no stamp duty up to £425,000 and 5% on any portion from £425,001 to £625,000.

If the property price is more than £625,000, buyers cannot claim the relief.

Zoopla recently analysed first-time buyer inquiries about homes for sale over the past six months.

It found eight in 10 first-time buyers searching for a home on Zoopla were looking for homes priced at under £425,000, while 7% were looking over the £625,000 threshold and would still have to pay full stamp duty.

First-time buyers searching to purchase in southern England are generally having to look for higher-value homes and face paying the most stamp duty, Zoopla said.

According to customer data from Santander, in the first quarter of 2024 a fifth of people taking their first step on the property ladder are over the age of 40.

General Election campaign 2024 - Rishi Sunak in at Silverstone
Prime Minister Rishi Sunak after launching the Conservative Party General Election manifesto at Silverstone in Towcester, Northamptonshire on Tuesday (James Manning/PA)

The new Help to Buy scheme being proposed by the Conservatives, should they win the General Election in July, would provide first-time buyers with an equity loan of up to 20% towards the cost of a new-build home.

First-time buyers would be able to get onto the housing ladder with a 5% deposit under the scheme. The initiative would in part be funded by contributions from house builders.

The party also plans to continue with an existing Mortgage Guarantee Scheme.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said of Help to Buy: “This scheme has made a demonstrable difference to buyers’ ability to stretch to a deposit.

“However, there’s also a real risk it pushes up the cost of new-builds – unwinding many of the benefits. Currently, the average price of a new-build is £388,789, which is up an eye-watering 17% in a year.

“Compare this to the average price of resales at £276,194 – which is down 1.8% in a year.”

The Conservatives also pledged two years of temporary capital gains tax relief for landlords selling up to their existing tenants.

Ms Coles added: “The manifesto suggests a temporary two-year capital gains tax holiday for landlords who sell to tenants, to incentivise them to sell to those who already live there.

“We will have to see whether they are prepared to do this, or whether in an environment where prices remain robust, they chance their arm with a sale on the open market.”

Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said: “Tenants who want to become homeowners should be supported to do so.

“While 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.”

Tim Bannister, Rightmove’s property expert said: “Some of the proposals announced this morning sound like a start, but there’s still scope to go further in helping the majority of first-time buyers or removing barriers to movement.”

He added: “The focus should be on long-term solutions in addition to short-term support, and any new policy needs to consider the potential knock-on effects of that policy on the wider housing market.

“It’s an interesting area to consider how renters may be supported in purchasing the home that they live in from their landlord, in the event that they wish to sell.

“One barrier to this is that many renters live in properties that they would be unable to afford to purchase, as the typical affordability criteria to rent a property can be more accessible than the requirements to buy.”

The manifesto document also said that in England over the next Parliament, the party would deliver 1.6 million homes “while protecting our countryside”.

This would partly be delivered by abolishing the legacy EU rules, as well as providing a “fast track” route through the planning system for new homes on previously developed land in major cities.

Strong design codes will ensure this enables the “gentle densification of urban areas,” with housing on tree-lined streets built in the local character, the manifesto document said.

It also committed the party to “raising density levels in inner London to those of European cities like Paris and Barcelona” while also “retaining our cast-iron commitment to protect the Green Belt from uncontrolled development”.

The document stated said that the party would make sure local authorities use the new infrastructure levy to deliver the GP surgeries, roads and other local infrastructure needed to support homes.

Housebuilding targets – and the ability of governments to meet them – have frequently come under scrutiny and been the subject of political rows.

Prime Minister Rishi Sunak last year dropped compulsory housing targets to ward off a potential backbench Tory rebellion.

He chose instead to make the commitment to build 300,000 homes a year in England advisory after construction repeatedly fell short.

In February, accusing ministers of previously ignoring calls for greater investment in brownfield development, a spokeswoman for London Mayor Sadiq Khan said he would not “take lectures from a government that has scrapped housing targets nationally and sent people’s rents and mortgages soaring”.

Nathan Emerson, chief executive at property professionals’ body Propertymark said: “Ultimately, we need a fully robust supply of new sustainable housing that is keeping pace with an ever-growing demand.”

The Conservatives’ manifesto document said: “We have delivered over 2.5 million homes since 2010.”

Justin Young, CEO of the Royal Institution of Chartered Surveyors (Rics), said: “Having delivered only 2.5 million homes over the last 14 years, the Conservative Party has made an ambitious pledge to build 1.6 million homes over the next five years.

“That is over 300,000 new homes a year – which hasn’t been achieved since the 60s, a period during which the public sector and SME housebuilders had a far greater role in housing delivery.

“While it’s encouraging to see the Conservatives committing themselves to supporting small builders, this will not address the quagmire of laws that make up Britain’s restrictive and politically permeated planning system.

“We welcome any initiative that helps first-time buyers, but demand-side solutions must be combined with workable supply-side solutions. To begin improving affordability levels the UK must build more housing; there is currently a shortfall of 4.3 million homes in the UK by some estimates.

“While a stamp duty cut would help in the short-term by enabling more buyers onto the first rung of the property ladder, it’s vital that we learn lessons from the past and introduce policies that address the plethora of structural issues that exist within house building.

“Supply must be addressed across all tenures, otherwise with Help to Buy 2.0 we risk a repeat of the negatives of the first scheme.”