The Conservatives have pledged to permanently scrap stamp duty on homes worth up to £425,000 for first-time buyers and introduce a “new and improved” Help to Buy scheme.
Stamp duty applies in England and Northern Ireland, while different property taxes apply in Wales and Scotland.
The “zero” stamp duty band for first-time buyers was previously increased from £300,000 to £425,000, which was due to end in March next year.
Buyers can currently claim relief if the property is their first home.
This means you pay no stamp duty up to £425,000 and 5% on the portion from £425,001 to £625,000.
Buyers cannot claim relief if the price of the property exceeds £625,000.
Zoopla recently analyzed first-time buyer inquiries for homes sold in the last six months.
Eight in 10 first-time buyers searching for a home on Zoopla were looking for a home priced under £425,000, while 7% were over the £625,000 limit, meaning they would have to pay full stamp duty.
First-time buyers looking to buy in the south of England will generally have to look for higher value homes and pay the highest stamp duty, Zoopla said.
A fifth of people taking their first step onto the property ladder in the first quarter of 2024 were over 40, according to Santander’s customer data.
The new Help to Buy scheme proposed by the Conservatives would offer first-time buyers up to 20% equity loans towards the cost of their new home if they win July's general election.
First-time buyers can get on the housing ladder by putting down a 5% deposit under the scheme. The scheme will be partly funded by donations from housebuilders.
The party also plans to continue the existing mortgage guarantee scheme.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said of Help to Buy: “This scheme has made a noticeable difference to buyers’ ability to extend to deposits.
“But there is also the risk that many of the benefits will be lost as new build costs rise. The average price of a new build is now £388,789, up a whopping 17% in just one year.
“Compare this to the average resale price of £276,194 – a decline of 1.8% over the year.”
The Conservatives have also promised a temporary two-year capital gains tax break for landlords who sell to existing tenants.
Mr Coles added: “The declaration proposes a temporary two-year capital gains tax exemption for landlords who sell to tenants, in a bid to encourage them to sell to people already living there.
“We will have to see if they are ready to do this or if they can get the opportunity to sell on the open market in an environment where prices are still robust.”
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said: “Renters who want to become homeowners need to be supported to do so.
“Encouraging landlords to sell to existing tenants may help, but it cannot undo the damage to the rental market caused by the Conservative government’s recent tax rises.”
Tim Bannister, property expert at Rightmove, said: “Some of the proposals announced this morning sound like a start, but there is room to do more to help the majority of first-time buyers or remove barriers to movement.”
He added: “There must be a focus on long-term solutions beyond short-term support, and any new policies must take into account their potential knock-on effects on the wider housing market.
“It is an interesting area to consider how tenants can be supported in purchasing the home they live in from their landlord if they wish to sell.
“One barrier to this is that many renters are living in properties they cannot afford to buy, as the general affordability criteria for renting a property may be more accessible than the purchase requirements.”
The manifesto document also states that the party will deliver 1.6 million homes in England through the next parliament “while protecting our countryside”.
This will be achieved in part by scrapping existing EU rules and providing a “fast track” route through the planning system for new homes on previously developed land in major cities.
A strong design code would enable “gentle densification of urban areas” by building homes on tree-lined streets that fit local character, the manifesto document says.
He also pledged the party to “raise density levels in inner London to those of European cities such as Paris and Barcelona, while maintaining our firm commitment to protecting the greenbelt from uncontrolled development.”
The document states that the party will ensure local authorities use the new infrastructure levy to provide GP surgeries, roads and other local infrastructure needed to support households.
Homebuilding targets and the government's ability to meet them have frequently been subject to scrutiny and political debate.
Last year, Chancellor Rishi Sunak scrapped mandatory housing targets to head off a potential backbench Tory revolt.
He decided to replace the UK consultation's promise to build 300,000 homes a year after repeated shortfalls in construction.
In February, a spokesman for the Mayor of London, Sadiq Khan, accused ministers of ignoring calls for greater investment in brownfield developments, saying they had “not been lectured by a government that scrapped housing targets across the country and sent people's rents and mortgages soaring”. “It won’t happen,” he said.
“Ultimately, we need a full supply of sustainable new homes to keep up with ever-growing demand,” said Nathan Emerson, chief executive of property expert body Propertymark.
“We have delivered more than 2.5 million homes since 2010,” the Conservative manifesto document reads.
Justin Young, CEO of the Royal Institution of Chartered Surveyors (Rics), said: “After delivering just 2.5 million homes over the past 14 years, the Conservatives have made an ambitious pledge to build 1.6 million homes over the next five years.
“That’s over 300,000 new homes per year. These are figures that have not been achieved since the Sixties, when the public sector and small and medium-sized housebuilders played a much larger role in housing provision.
“It is encouraging that the Conservatives are pledging to support small builders, but this will not resolve the quagmire of laws that make up Britain’s restrictive and politically permeated planning system.
“We welcome any scheme that helps first-time buyers. But demand-side solutions must be combined with viable supply-side solutions. To improve affordability levels, the UK needs to build more homes. According to some estimates, there is currently a shortage of 4.3 million homes in the UK.
“While stamp duty cuts may help in the short term by enabling more buyers to get onto the first rung of the property ladder, it is important to learn from the past and introduce policies that address the numerous structural problems that exist in housebuilding. do. .
“Provision must be addressed across all tenures or we risk repeating the negative outcomes of the first scheme with Help to Buy 2.0.”