General Election 2024: Labour unveils Freedom to Buy ...

Housing has finally made it onto the General Election campaign, albeit with a familiar policy.

Labour has unveiled plans for a Freedom to Buy scheme to get more young people onto the housing ladder.

The political party said the plans would support more than 80,000 young people to get on the housing ladder over the next five years.

Freedom to Buy is a mortgage guarantee scheme, similar to the current Tory initiative, but Labour said its version would be permanent rather than expire in June 2025.

The current Mortgage Guarantee Scheme compensates mortgage lenders for a portion of net losses suffered in the event of repossession. The guarantee applies down to 80% of the purchase value of the guaranteed property covering 95% of these net losses.

Other policies include pledging to reform the planning system to help build 1.5m homes, giving local people first dibs on developments and tax foreign buyers.

Keir Starmer, leader of the Labour Party, said: ““Our changed Labour Party will be on the side of the builders not the blockers, to get Britain building again. My Labour Government will help first-time buyers onto the ladder with a new Freedom to Buy scheme for those without a large deposit, and by giving them first dibs on new developments.

“Labour backs hard work and ambition, and will clear the way for the opportunity to own a home. It’s time to stop the chaos, turn the page, and rebuild Britain.”

Angela Rayner, Labour Deputy Leader and Shadow Secretary of State for Levelling Up, Housing and Communities, added: “The Tories have crashed housebuilding, putting the dream of a safe, secure and affordable home further out of reach. Rishi Sunak is too weak to deliver the change our country needs.

“Labour’s new Freedom to Buy scheme will deliver for working people across the country. We will deliver more action on housing in the first year of a Labour Government than this crumbling Conservative government has managed in over a decade.

“Labour’s plan would get Britain building again with a new scheme to help young people get a mortgage and with a housing recovery plan, creating a generation of new towns and unlocking economic growth across Britain.

"Labour is the party of homeownership, and the only Party serious about building the homes Britain needs. We will deliver the change needed and end the Tory chaos."

Commenting on the plans, 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. The use of high loan-to-value mortgages has fallen since the global financial crisis largely due to tougher mortgage regulations.

"The use of a mortgage guarantee means banks can reduce the cost of the mortgage with a small deposit. While the mortgage rate may be lower, these borrowers will still need to prove they can pay a stressed mortgage rate at a higher level than the actual rate they will pay, which currently averages over 8%.

"Small deposit mortgages tend to work in lower-value housing markets where the repayments on a 95% loan don't account for a high proportion of the buyer's income. They are much harder to make work in southern England where the affordability pressures on first-time buyers are greatest. Overall it's welcome news but the projected target will only account for 5% of first-time buyers a year."