Labour focuses on first-time buyers

The Labour leader announced that a sixth promise - to deliver "homes to buy and action on rents" - was being added to the "pledge card" he launched earlier in the election campaign. The new pledge covers not only stamp duty, but also limits on private rent rises which he set out on Sunday.

Higher taxes will be imposed on foreign buyers and up to half of new homes will be earmarked for local residents trying to get a foot on the property ladder as part of the Labour leader's plans to tackle what he described as a "housing crisis".

Cutting stamp duty to zero over next three years would benefit nine out of 10 people buying their first home and could save up to £5,000, according to Labour.

The plan would cost £225 million a year, which Mr Miliband said would be found through a series of tax-related measures.

But Conservatives dismissed the proposal as "panicky and unfunded", while Liberal Democrats said: "No-one should trust Labour to deliver this commitment because their sums simply do not add up."

Support for home ownership represents a bid by Labour to seize traditional Conservative territory, after David Cameron revived the Thatcherite right to buy policy in an attempt to win over voters struggling to enter the property market.

Mr Miliband derided Tories as a "party that used to say they were the party of home ownership" as he accused Mr Cameron of presiding over the lowest levels of housebuilding in peacetime since the 1920s and owner-occupation at its lowest level in 30 years.

Average house prices have risen to eight times the average wage and more than one third of central London properties have been snapped up by overseas buyers, the party said.

In a speech in Stockton-on-Tees, Mr Miliband said: "There's nothing more British than the dream of home-ownership. But for so many young people today that dream is fading with millions more renting when they want to buy, new properties being snapped up before local people get a look-in."

Under the new plans, Labour will change planning laws to introduce a "first call" policy that would give first time buyers who have lived in an area for more than three years priority on up to half of local new homes.

It will also introduce a "local first" policy that would stop properties being advertised overseas before they have been in the UK, so that "houses are lived in by families not bought up by speculators", said Mr Miliband.

Chancellor George Osborne allowed a two-year holiday on stamp duty, which raised the threshold for first-time buyers to £250,000, to expire in March 2012 - introducing a New Buy Guarantee in its place.

Buyers currently pay nothing on the first £125,000 of a home's value and are then charged on a sliding scale, starting with 2% on the next £125,000 and 5% on the following £675,000.

Labour says it would fund the stamp duty plans by tackling tax avoidance by landlords, pointing to HMRC figures that estimate it costs £550 million a year.

It claims introducing a national register of landlords would mean that figure could be cut by 20%, bringing in £100 million for Treasury coffers.

Holding companies that buy properties for investors would be hit by increases to the annual tax on enveloped dwellings, while buyers from outside the European Union would be hit by a hike in their stamp duty bills of at least 3%.

Tax relief for landlords to cover the upkeep of furnished properties would also be reduced for rogue landlords that rent out sub-standard properties.

Mr Miliband said a Labour government would build 200,000 homes a year, including a "new generation of garden cities", and would stop developers hoarding land which could be built on.

And he added: "We won't just build homes. We will make sure there is real priority for first-time buyers.

"It is simply too expensive for so many young people to buy a home today. Saving up for the deposit, p aying the fees, a nd having enough left over for the stamp duty.

"So we're going to act. We're going to put first time buyers first.

"For the first three years of the next Labour government, we will abolish stamp duty for all first time buyers buying a home under £300,000.

"That's nine out of 10 of all first time buyers in Britain, s aving up to £5,000. Because the government I lead is determined to restore the dream of home ownership in our country."

A Conservative spokesman said: "This panicky, unfunded announcement is something Labour have tried before - and it failed. Coming from the people who crashed the housing market and repeatedly raised stamp duty, this won't distract from Ed Miliband's inability to say what deals he will make with the SNP to prop him up in Downing Street."

A Liberal Democrat spokesman said: " No-one should trust Labour to deliver this commitment because their sums simply do not add up. The Liberal Democrats have been honest about our spending plans; it's time Labour and the Tories did the same"

David Orr, chief executive of housing association trade body the National Housing Federation, warned: "S lashing stamp duty could lead to even higher demand on homes for first-time buyers, pushing up prices even further out of reach, while not addressing the supply of homes we so desperately need."

And Ukip housing spokesman, Andrew Charalambous, said: " This is uncosted blatant last-minute electioneering. Any help for first-time buyers is of course welcome, but there is a significant risk that all this measure will do is lead to further house price inflation as it changes neither the number of would-be buyers nor the number of properties available for sale"

Alex Hilton, director of Generation Rent, which campaigns for private tenants, said: "Any cut to stamp duty just stimulates demand for housing. The extra cash a first time buyer would have just goes straight to the person selling the house at a higher price. More giveaways won't fix the housing crisis - the Government should spend any extra tax revenues from landlords on expanding supply.

"According to Labour's own housing review, we need to build 243,000 new homes a year to keep up with demand - that's at least 1.2 million over the next five years. The one million Labour is planning is not enough and will see the housing crisis get even worse."

Mr Miliband dismissed Conservative criticism of the housing plans. He said: "When your opponents have nothing to say to criticise your idea they say 'why are they unveiling the idea now?'

"It's a pretty useless excuse."

He added: "We are going to go right to the finish line with positive ideas to change this country."

The Labour leader denied the policy was aimed at keeping immigrants out of the market. "This is absolutely a policy about local people and local first time buyers," he said.

Asked if he was concerned about falls today in housebuilder shares, he replied: "Our proposals will be better proposals for home owners in Britain and for companies building homes in Britain.

"At the moment we have a housing market that is frankly working and we have government that is not unblocking the real barriers there are in the housing market."

Jeremy Blackburn, head of policy at the Royal Institute of Chartered Surveyors, said: "While this proposed stamp duty reform could help some first-time buyers in the market, it's another measure that tinkers with demand-side stimulus.

"Prices are already predicted to rise in the next Parliament and this is only likely to make matters worse. The promise of one million homes by 2020 is an ambitious target, but Labour has not fully explained how they expect to remove obstacles to such a supply-side revolution."

CBI director-general John Cridland said: "It's right to help first-time buyers get on to the property ladder, which could also provide a boost to the economy and the housing market.

"We urgently need more homes for people to buy, which is why the number one priority for housing policy must be building 240,000 new properties each year.

"We look forward to seeing more detailed costings and timelines for these proposals."

Campbell Robb, chief executive of homelessness charity Shelter, said: "Thanks to the failure of successive governments, home ownership is at its lowest level for 30 years, with millions of families and young people priced out and losing out.

"While reducing stamp duty may help at the margins, the only way to give Generation Rent a fighting chance of their own home is tackle the root causes of our housing crisis by building the affordable homes we desperately need. Shelter has long campaigned for politicians to make this a priority and we welcome these plans to do so.

"But we need to see all parties put their money where their mouth is when it comes to genuinely affordable housing, to give the priced-out generation real hope of a home to call their own."