Labour unveils 'Freedom to Buy' pledge to get young people on housing ladder

Freedom to Buy will get 80,000 young people onto the housing ladder by the next general election, Keir Starmer's party has claimed

Sir Keir Starmer addresses Labour Party supporters during the 2024 general election campaign (Photographer: Hollie Adams/Bloomberg via Getty Images)
Freedom to Buy will help turn 'dreams into reality' when it comes to owning a first home (Photographer: Hollie Adams/Bloomberg via Getty Images)
(Image credit: Getty Images)

Labour has pledged to get 80,000 young people onto the housing ladder over the next five years through a ‘Freedom to Buy’ scheme, if it wins the general election.

The policy would be an extended, permanent version of the Conservatives’ mortgage guarantee scheme, which is currently due to expire in June 2025. Keir Starmer said his plan would “clear the way for the opportunity to own a home”.

Alongside the first-time buyer scheme, Labour said it would reintroduce housing targets and reform the planning system to increase the availability of homes. Other policies it has announced so far on the election campaign trail include plans to create a state-owned clean energy company, maintain the triple lock, and add VAT to private school fees.

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This week, the party has become embroiled in a bitter tax row with the Conservative Party. Both parties have committed to not increase income tax, National Insurance and VAT in the next Parliament.

Starmer: Freedom to Buy will ‘turn home ownership dreams into reality’

Labour claimed Freedom to Buy will be a more comprehensive version of the mortgage guarantee scheme. It would incentivise lenders to offer high loan-to-value (LTV) mortgages by acting as a guarantor for prospective first-time buyers who cannot afford a big deposit.

The current iteration of the scheme, which applies to homes worth up to a value of £600,000, was initially announced by Rishi Sunak in the 2021 Spring Budget. The then-Chancellor used it as part of a bid to resurrect the housing market after the Covid-19 pandemic.

Starmer’s party claimed that because it was labelled as a temporary measure from the outset, high LTV mortgages have only been a peripheral part of the market. Figures from Zoopla showed that less than 1% of mortgage lending to first-time buyers has been over 95% LTV over the past five years. LTVs of 90% to 95% account for 20% of the new loans issued over this period.

By making the scheme permanent and giving lenders certainty, Labour said it would increase the availability and lower the cost of mortgages for low-deposit buyers - something similar schemes in Australia and Canada had achieved.

Starmer said: “After 14 years of Conservative government, the dream of home ownership is out of reach for too many hard working people. Despite doing everything right, they can’t move on and up. A generation face [sic] becoming renters for life.

“My parents’ home gave them security and was a foundation for our family. As prime minister, I will turn the dream of owning a home into a reality.”

Non-partisan think tank the Institute for Fiscal Studies (IFS) said the scheme had the "potential" to help first-time buyers. But it suggested it would not go far enough to solve the lack of home ownership among younger people.

Its senior research economist, David Sturrock, said: "The need to save up for a deposit is only one hurdle: prospective buyers also need to have a sufficiently high income to take out a (bigger) mortgage and afford the repayments.

"As a result, potential buyers who are in their 30s and from better-off backgrounds, and who are looking to buy outside of London and the south east, are more likely to be able to take advantage of this scheme.”

Labour to bring back new home targets

Starmer also said a Labour government would “get Britain building again” by bringing back house building targets. His party has pledged to build 1.5 million homes over the next Parliament, marking the return of the 300,000 new homes a year target successive Conservative governments have promised but failed to meet.

The Conservative 2019 general election manifesto pledged to build a million homes by the next general election - i.e. now. While the Conservatives have claimed they have met the overall target, we will not get official figures until later this year. What we do know is that the party is unlikely to achieve the 300,000 target as the construction of new homes ground to a halt in the second-half of 2023.

To hit the 1.5 million target, Labour said it would build on disused ‘grey belt’ land, fast track brownfield planning applications and unveil more new towns. The party added that it would reform compulsory purchase laws in a bid to "stop speculators frustrating housebuilding and squeezing value from infrastructure and affordable housing”.

Starmer also revealed that Labour would give “first dibs” on new developments to local people in a bid to stop international investors from snapping up new housing estates. He added that his party would "tax foreign buyers" who price young people out of the housing market, using the proceeds to "fund new planning officers" to approve homes next generation needs.

How has the property industry reacted to Freedom to Buy?

Labour’s plans have been met positively by several key players in the property market, including builders.

Richard Donnell, executive director at Zoopla, said: "Policies to support people to buy their first home are always welcome. One of the greatest challenges facing first-time buyers is the deposit needed to fund a purchase.”

However, Donnell echoed the IFS by warning that borrowers benefitting from the scheme “will still need to prove they can pay a stressed mortgage rate at a higher level than the actual rate they will pay”, meaning they may need to have high income. He added that the plans may only work in “lower-value housing markets” and could be “much harder to make work in southern England” where repayments could still be unaffordable for less-well-off buyers.

Barratt Developments, one of the biggest house builders in the UK, greeted the announcement positively. Its chief executive, David Thomas, said: “We welcome proposals that could help more people buy their first home in a challenging market.

“In order to support more people to buy their first home, it is also important that we improve the current planning system, which includes setting housing targets in local plans and recruiting more skilled planners, so local authorities and housebuilders can build the much-needed, high-quality and energy-efficient homes the country needs.”

Meanwhile, fellow house builder Vistry Group also backed the plans. Stephen Teagle, its CEO of partnerships and regeneration, said: “Vistry supports Labour's plans to increase the supply of much needed homes, including affordable housing and homes to buy, alongside their proposed Freedom to Buy offer.

“Access to affordable housing within thriving communities is essential for so many families currently denied choice. We are confident that the planning reforms set out by Labour will dismantle some of the current barriers to building more homes, enabling Vistry as one of the country's largest house builders to build more homes of all tenures over the coming years.”

Conservatives pledge to not increase stamp duty

On Thursday, the Conservative Party also made its first housing pledge of the general election campaign. In an article for the Daily Telegraph, which doubled down on Rishi Sunak’s £2,000 Labour tax attack, Chancellor Jeremy Hunt promised that a Tory government would not hike stamp duty.

Announcing a ‘Family Home Tax Guarantee’, Hunt committed “not to increase the rate or level of stamp duty”. He said he was “throwing down the gauntlet” to Labour to match the new pledge. Sir Keir Starmer’s party has said it wants to “reduce taxes on working people”.

His predecessor as Chancellor, Kwasi Kwarteng, introduced a permanent cut to stamp duty in the 2022 mini-Budget. Hunt made this policy temporary when he gave his follow-up Autumn Statement, with the current thresholds set to expire in spring 2025. He suggested at the time that he would create a different property tax system, although it seems this aspiration will not be a priority for a potential future Conservative government.

Henry Sandercock
Staff Writer

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV. 

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years. 

After moving to - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.