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27/04/2015

Labour pledges stamp duty and rent cap help

Words: Laura Edgar

Labour leader Ed Miliband has declared that first-time buyers would be exempt from stamp duty in England and Wales, and that a Labour administration would cap private rents if the party found itself in government after the general election.

Miliband said action needs to be taken to address the low levels of house building and falling home ownership. He announced that first-time buyers would not have to pay stamp duty for the first three years of a Labour government on homes purchased for less that £300,000.

In addition, Miliband has promised to control private rent increases so that landlords cannot increases costs by more than the rate of inflation (CPI).

Landlords and letting agencies would also be required to disclose what the previous tenant paid.

He promised “the security of three-year tenancies for all who want them with rents capped, so they can fall but not rise by more than inflation. The rights they need to negotiate a decent deal with landlords and stop rip-off letting fees. And the protection for taxpayers and tenants against bad landlords who are being subsidised for providing accommodation that fails to meet basic standards”.

John Longworth, director general at the British Chamber of Commerce, said Labour's proposals “simply don’t make sense”.

"These policies will undermine house building in the private rental market, while stoking demand in the sales market without doing anything to improve supply.” 

Melanie Leech, chief executive of the British Property Federation, said that the rent cap policy could lead to uneven rent rises for tenants who live in a property for several years when after three years, it returns to market costs.

Leech explained: “Ultimately, what will help tenants best is more investment in housing.

"Pension funds and other institutions have billions to invest in this market - developing places that would provide a new generation of high-quality homes that offer greater choice to renters, including the option to sign longer tenancies.

"This additional investment will be vital to tackle the housing crisis, and we would urge the next government to do all it can to encourage it, rather than chase it away with an overly proscriptive approach to rent setting.

"In places like London, tenants will find this policy on rents may make their budgeting harder rather than easier. Their rent will tick along at CPI for a couple of years and then they will face a potential sharp rise in year three when the rent returns to market."

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