• First time buyers outside London will save just £242 in Stamp Duty with Labour’s new pledge
> • Rents in London would have gone up twice as fast if they had been pegged to inflation as Labour promise
The latest Labour pledge is to abolish stamp duty for first-time buyers purchasing homes worth up to £300,000 for the next three years. They have said that it will benefit nine in 10 such buyers to the tune of £5,000. Labour are clearly very bad at their sums.
The average purchase price for a first time buyer outside London is £137,120, according to the Halifax. Following the new Stamp Duty reforms introduced by the Conservative coalition last December, the Stamp Duty charge for buyers at this level is just £242. This is what the Labour policy would save, not £5,000.
If we look at the country as a whole, including London, the average price for a first time buyer, is £171,870. Again, due to the recent reforms, Labour would be knocking £937 off their purchase costs, not £5,000.
The risk of such artificial incentives (apart from, some would say, Labour winning votes) is that it increases demand to buy property and hence puts upward pressure on prices, wiping out any savings. Greater accessibility to homes, either to buy or rent, can only be resolved by building more. Labour’s Shadow Secretary of State, Hilary Benn, refused to say how much they would build in the three years during the Stamp Duty holiday. Labour have also pledged to cap rents in line with inflation, again avoiding the real issue that we need more homes, not state control.
Once more, Mr Miliband has not done his sums. This makes the new pledge even more worrisome because it woos voters on the premise of false hope. The Labour Party claims that some tenants in London have faced double digit annual rises since 2010. Of course, what they usefully omitted in their figures was the severe downturn during the credit crunch.
Taking London, the truth is that rents have risen on average risen just 10.2% between May 2008 and today. In other words, just nudging a double digit rise over seven years! On the other hand, inflation has gone up 19.9%, twice as fast as the rise in rents. Tenants are generally better off than they were before.
Pegging to inflation does not seem to be such a great handout in this context. If Labour are trying to move us from a market economy to a state controlled economy, which there is every sign of, we should all be deeply worried. The undeniable truth is that we can only sort out the housing crisis through building more property. Labour’s last resort to vote winning sound bites sadly has no grounds in hard fact and demonstrates their lack of numerical competence.
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