Rishi Sunak has unveiled plans to launch a “new and improved” Help to Buy scheme which aims to give people in England a hand with raising deposits to buy their first home.
The prime minister has said he would also permanently abolish stamp duty for first-time buyers on homes up to £425,000, if he wins the general election.
The Conservative manifesto – setting out the party’s policy priorities for government – also includes a target of 1.6 million new homes over five years, slightly more than Labour is promising.
Mr Sunak also committed the Conservatives to continuing its mortgage guarantee scheme, matching Labour’s pledge to do so.
For renters, the Tories say they would ban no-fault evictions, something they first promised to do at the 2019 general election.
Landlords would also not have to pay tax on profits when selling properties to tenants, under Tory plans.
Mr Sunak says this will give tenants “a chance to own the home they live in”, but landlord groups say this will not address shortages in homes available to let.
Unveiling the Conservative manifesto at Silverstone race track, he said the new Help to Buy scheme would “get a new generation onto the property ladder”.
The scheme would provide first-time buyers with an equity loan of up to 20% towards the cost of a new-build home. This will allow them to get buy a first home with a 5% deposit, according to the manifesto.
The scheme would last three years, with developers contributing towards loan costs and no interest on the government loan for the first five years. The Times reports that the scheme would be available for purchases under £400,000.
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Hundreds of thousands of people have been bought through the Help to Buy scheme since it was launched in 2013 – although it has also been criticised as the “crack cocaine of the building industry,” and blamed for pushing up house prices.
The original scheme ended in March 2023 for England, although first-time buyers can still apply for loans under it in Wales.
‘Small minority’
The Institute for Fiscal Studies said the New Help to Buy Scheme could help potential homebuyers get on the property ladder by reducing deposits and making payments more manageable in the short term.
But the think tank also warned that it was a subsidy for the housing market that in the past had led to higher house prices and profits for developers – and that “some who buy would be able to do so without the scheme”.
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Polly Neate, chief executive of housing charity Shelter, said: “Help to Buy has been proven to do more harm to our housing system than good.
“Not only does it drive up house prices and help only a small minority of people, it ultimately takes money away from building genuinely affordable housing.”
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 prime minister also said that, if re-elected, the Tories would scrap capital gains tax for landlords who sell their property to existing tenants.
Landlords currently have to pay the tax on profits they make from a sale, and Mr Sunak said the proposed tax relief would “incentivise landlords to give tenants a chance to own the home they live in”.
“It is good for landlords and transformational for tenant,” he wrote in the Telegraph.
The National Residential Landlords Association said: “Tenants who want to become homeowners should be supported to do so.
“Whilst 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.”
The Conservatives have a target to build 300,000 new homes in England per year by the “mid-2020s”, which it is yet to meet.
Labour has pledged a similar target of building 1.5m homes over a five-year period in England if it is elected. It has promised radical plans to streamline the planning system, although details are yet to be announced.
The Liberal Democrats, who launched their manifesto on Monday, are pledging to build 380,000 new homes a year across the UK, including a specific annual target of 150,000 social homes.
