Labour plans first-time buyers’ tax of up to £11,500, warns Michael Gove

Couple moving house
Couple moving house

Labour plans to hit young couples with a first-time buyers’ tax of up to £11,000, Michael Gove has claimed.

The Housing Secretary said Labour would leave people trying to get on the property ladder worse off by refusing to match a Tory stamp duty cut.

The party dismissed the claim as “baseless mudslinging” that “reeks of desperation”.

Mr Gove’s warning came as Rachel Reeves, the shadow chancellor, was forced to row back on remarks by Sir Keir Starmer over who is at risk of tax rises under a Labour government.

The property price threshold at which stamp duty kicks in for first-time buyers was temporarily raised by Liz Truss from £300,000 to £425,000.

In their manifesto, the Tories have pledged to make the higher rate permanent. Labour has not, meaning it would revert to £300,000 from next April.

Conservative analysis claimed that reinstating the original threshold would cost 200,000 first-time buyers an extra £3,500 in tax on average. For some people getting on the ladder the bill could be as high as £11,250, it said.

Mr Gove said: “Labour’s unfunded spending commitments mean they will raise taxes for every working household by £2,094.

“That includes hammering hundreds of thousands of first-time buyers with a massive stamp duty increase from next April, as well as plans to hit people’s savings with a suite of taxes that will erode the money saved for a deposit.”

Laura Trott, the Chief Financial Secretary to the Treasury, warned that, under Labour, “instead of a helping hand, you will get a stamping foot”.

Writing for The Telegraph, she said: “Getting people to own their own home has never been a priority for Labour, and it never will be.”

Labour said it would help first-time buyers by building more homes, introducing a permanent low deposit mortgage scheme and giving young families first refusal on new builds.

“Over 14 years the Tories have completely failed on housing, and home ownership has become a pipedream for most working families,” said a party spokesman.

“Rishi Sunak has himself admitted it has become ‘harder’ to own a home under his government, and no amount of baseless mudslinging can alter that fact. Labour will turn the page on this Conservative chaos.”

The Tories have accused Labour of making unfunded spending pledges amounting to £38.5 billion, which would require tax rises of £2,000 per household.

Labour has strongly disputed the figures as a “desperate lie” but the party has faced growing questions over which levies it plans to raise once in power.

Sir Keir has promised not to put up the rates of income tax, National Insurance or VAT for at least five years but has refused to rule out other increases.

He has made a manifesto promise “not to increase taxes on working people” but sowed confusion on Monday about what that policy means.

When pressed, Labour’s leader said he considered a working person to be someone who relies on public services and does not have meaningful savings. His remarks were seen as opening the door to tax rises on millions of savers, investors, pensioners and users of private services such as healthcare.

Ms Reeves looked to shut down growing criticism on Wednesday by rowing back on his definition, saying working people are “those people who go out and work and earn their money through hard work”, adding that savers “are working people as well”.

In recent day,s Labour has refused to rule out increases to council tax, capital gains tax, or inheritance tax if it wins power on July 4. The party has also faced questions over whether it would impose a “retirement tax” on the state pension by failing to match the Tory “triple lock plus”.

On the current trajectory, the annual state pension payment is set to breach the lower income tax bracket from 2027, meaning it would be taxed for the first time.

Sir Keir has repeatedly insisted none of his plans require tax rises beyond the raids on private schools, overseas property investors, energy giants and non-doms in his manifesto. But he has also said that he will not “write the budgets for the next five years” now by pledging not to increase specific taxes.

A Conservative spokesman said: “Keir Starmer sees your pension and your family home as assets sitting there waiting to be taxed.”

Home ownership rightly sits at the heart of Conservatism

Margaret Thatcher’s Right to Buy scheme lifted millions who were locked into renting into proud property owners and, since 2010, the Conservatives have delivered 2.5 million homes.

We have also directly supported 892,000 households to make the dream of home ownership a reality via schemes such as Right to Buy, Mortgage Guarantee Scheme and the Help to Buy equity loan. But we know there’s much more to do.

Many people reading this will have children or grandchildren trying to get on the property ladder. Some will be trying to get on themselves. We know how important it is to feel like this is within reach, and that is why, in our manifesto, we have set out a plan to go even further to help people buy homes.

We will deliver 1.6 million more additional homes by 2030, while still protecting our Green Belt. And we will abolish Stamp Duty for hundreds of thousands of first-time buyers by making the existing first-time buyer stamp duty holiday on houses up to £425,000 – which ends next April – permanent.

This will save first-time buyers thousands of pounds in upfront costs. But the Labour Party has not matched the Conservatives’ Plan for Home Ownership. New analysis shows Labour’s refusal to do so will land first-time buyers with a tax bill for up to £11,250 from next April when they buy their first home.

Let me be really clear what this means. A Labour government would increase stamp duty for first-time buyers from next April. Instead of a helping hand you will get a stamping foot, increasing the amount first-time buyers will pay in tax on their first home. The opposite of Conservative values, typical of Labour.

Assuming a similar number of transactions next year as in 2022/23, the latest year for which figures are available, this would mean over 200,000 house buyers under a Labour government will see an average tax increase of £3,500 when they buy their first home – with some first-time buyers having to pay as much as £11,250 extra. This is simply unaffordable.

And this is in addition to the £2,094 of taxes, which Telegraph readers will know will affect every working household across the country due to Labour’s unfunded spending commitments.

This week, economic experts at HSBC have already warned that Labour’s plans risk stoking inflation and pushing up mortgage bills, making it harder for people to get on the housing ladder under Labour.

Under the last Labour government, housebuilding fell to lows not seen since the 1920s. In Labour-run London, Sadiq Khan has kicked housebuilding into the long grass, missing target after target. And, in Labour-run Wales, they only built a dismal 5,000 houses last year.

Getting people to own their own home has never been a priority for Labour, and it never will be.

There is a clear choice at this election – the Conservatives, who will cut taxes and help you get the keys to your first home, and Labour who will lock a generation of families out of home ownership.

Labour hasn’t changed. Higher taxes. Fewer houses. It’s the same old Labour Party.

Laura Trott is the Chief Secretary to the Treasury