Labour woos homebuyers as Tories pledge to help families

Sir Keir Starmer will on Friday propose a government mortgage guarantee scheme aimed at getting 80,000 people on to the housing ladder as Labour and Conservatives battle for the votes of middle Britain.

Tory chancellor Jeremy Hunt will meanwhile promise to cut taxes for 700,000 families by an average of £1,500 each year by doubling to £120,000 the salary level at which child benefit starts to be withdrawn.

The Labour leader, whose party is currently 20 percentage points ahead of the Conservatives in the polls, will say his mortgage guarantee scheme — dubbed “Freedom to Buy” — will help those struggling to save for a large deposit. 

Under Labour’s plan, the state would act as guarantor for prospective homeowners.

The Conservative government has been running a similar programme offering a state guarantee for part of buyers’ mortgages, but this is currently due to expire in the summer of 2025. 

The existing scheme has benefited 43,000 purchasers — 37,000 of which were first-time buyers — from its launch in April 2021 until the end of last year.

Labour will pledge that its own programme would be a permanent scheme.

Starmer will argue that many working people trying to get on the housing ladder currently pay more in rent than they would for a mortgage. 

While half of young first-time buyers now receive financial support from their family to purchase a home, others have been left unable to save enough money for a deposit on a property.

The average deposit for a first-time buyer in England is £68,700, according to real estate group CBRE. 

“After 14 years of Conservative government, the dream of home ownership is out of reach for too many hard-working people,” Starmer will say.

Labour argues the government’s existing scheme has only ever been a “peripheral” part of the housing market because it was a temporary measure that was repeatedly extended. 

“For lenders, there’s little incentive to properly integrate the scheme into their offer to customers, as they expect it to expire in a matter of months,” Labour said.

“Even though it’s repeatedly been extended, the lack of certainty means many lenders treat it as a peripheral product. ” 

In their own pitch to middle-class voters, the Conservatives will promise a major overhaul of the child benefit tax charge, a major bugbear of middle-income families since it was introduced in 2013 by the then chancellor George Osborne.

Hunt said the income threshold at which people start to pay the charge would rise from £60,000 to £120,000 if the Tories win the election. A taper rate would see all child benefit removed at £160,000.

The chancellor said the proposal, which would cost £1.3bn, would be funded from the £6bn he claims the Tories could raise from a crackdown on tax avoidance and evasion — although some of that total has already been earmarked for Rishi Sunak’s proposed revival of national service and a “triple lock plus” tax protection for pensioners.

The Conservatives have also promised to end “the unfairness” of Osborne’s scheme by assessing the new £120,000 income threshold on the basis of combined household earnings.

Currently, it applies whenever one person in the household earns more than £60,000.

Labour is meanwhile refusing to reverse the government’s contentious two-child limit on welfare benefits, despite calls from many campaign groups and MPs to scrap the policy, according to people familiar with the opposition party’s draft manifesto.

The decision is the latest sign of Starmer’s determination to maintain financial caution, even though several members of his shadow cabinet have criticised the limit.

The arrangement restricts child tax credit and universal credit to the first two children in most households.