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Hunt issues challenge to Starmer over taxes on property

Sherman Henry Reeves — Thu, 20 Jun 2024 07:30:16 +0000

Jeremy Hunt has challenged Sir Keir Starmer to explicitly rule out property tax increases if Labour wins office at the general election.

Writing in The Telegraph, the Chancellor unveils a new pledge not to increase capital gains tax, stamp duty or the number of council tax bands.

He calls on the Labour leader to match the promises, which the Tories have dubbed their “family home tax guarantee”.

His comments come after Rishi Sunak repeatedly accused Sir Keir of planning to raise taxes by £2,000 in Tuesday night’s TV debate.

The Tories believe that policies over tax rises show the difference between them and Labour.

Mr Hunt writes: “I am throwing down the gauntlet to Rachel Reeves [the Labour shadow chancellor] and Sir Keir Starmer to join us in this pledge.

“This isn’t party political point scoring. I actually want to see the Labour Party say they will put families first and higher taxes second.”

Labour declined to do so on Wednesday night, instead issuing a blanket statement on wanting to “reduce taxes on working people” and accusing the Tories of “desperate claims”.

Last week, when the Conservatives challenged Labour to explicitly rule out a VAT rise, they did so.

Three new pledges

The “family home tax guarantee” is made up of new Tory pledges in three specific areas of property tax.

The first is promising that more council tax bands, “expensive” council tax revaluations and council tax discounts will not be implemented under a Tory government.

The second is that the party will maintain private residence relief, where people do not pay capital gains tax on their main home when it is sold.

The third is that the Tories will not increase the rate or level of stamp duty.

Tory sources pointed to Welsh Labour’s move to expand council tax bands and Ms Reeves’s past interest in property taxes to argue that their rivals could return to such ideas in office.

The intervention opened up a new front in the Tory tax attacks after the first TV election debate where Mr Sunak repeatedly claimed Labour would raise tax by £2,000 on working families over four years.

Sir Keir accused Mr Sunak of lying and even breaking the ministerial code over the claim, saying the Prime Minister’s willingness to push the attack showed “a flash of his character”.

But the Tories countered by insisting that those complaints were not matched by a clear explanation as to why the Conservatives’ estimate of a £38 billion black hole in Labour’s finances was wrong.

The focus on tax changes comes as the Tories continue to try to change the dynamic of the election campaign while Labour enjoys a vast lead in the opinion polls.

The first poll since Nigel Farage announced he would run as an MP put Reform, the party he now leads, just two percentage points behind the Tories.

Reform was on 17 per cent of the vote and the Conservatives 19 per cent, a YouGov poll said. Labour was on 40 per cent. That 21-percentage point lead is broadly in line with the average of other pollsters.

The Tory redoubling of efforts to reclaim their traditional tax-cutting mantle comes after the surprise calling of the general election for July 4 and a policy blitz failed to significantly shrink Labour’s lead.

Mr Hunt writes in The Telegraph: “Labour will raise your taxes. It’s who they are, it’s in their DNA. The Conservatives are the party of free enterprise and entrepreneurialism. Labour are the party of an ever-increasing state.

“Our philosophy is founded on clear principles that people and businesses should keep more of their money to spend and reinvest, thereby creating economic growth. Labour’s philosophy depends on grabbing ever more of that money to feed an expanding public sector. At this election, Sir Keir Starmer is telling you otherwise. He is trying to claim that Labour have changed. They haven’t.”

Labour did not match the Tory promises on stamp duty, council tax and capital gains tax on Wednesday.

Instead, a Labour spokesman said: “We will not be raising taxes on working people. The Conservatives cannot be trusted on tax and taxes are at a 70-year high on their watch.

“These are more desperate claims from Rishi Sunak who lied to the British people before and is lying to them again.”

Labour has already promised not to increase the rates of income tax, National Insurance and VAT – the same pledge the Tories made last election, which they are repeating for this one.

Labour is not proposing property tax increases, save for a stamp duty hike for overseas buyers of UK property.

However, Labour has faced pressure from the Tories to explain in more detail how it would fund many of its planned policies.

Tory sources pointed to support, past and present, for changes to property taxes among Labour figures.

Additionally, Welsh Labour is undertaking a council tax revaluation and considering increasing the number of council tax bands from nine to 12.

Ms Reeves, who will be the chancellor next month if Labour wins the election, expressed interest in property taxes in a 2018 report called The Everyday Economy.

She wrote in that report: “We should also consider the case for [council tax’s] overhaul and replacement with a property tax, levied on property owners. It would be more equitable and it would place the burden on landlords and not tenants.”

In the 2015 election campaign, Ed Miliband, the then Labour leader, proposed an annual charge for people with homes worth more than £2 million in what was dubbed a “mansion tax”.

Despite their promises, the Tories have faced criticism for overseeing a rise in the tax burden to its highest level in 70 years over the last parliament via “stealth” freezes to tax thresholds – something Tory MPs have publicly criticised.

Source: The Telegraph

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Labour has promised 25-year fixed-rate mortgages across the UK. Who do they benefit most?

Jeffery Blair — Mon, 29 Jan 2024 11:29:04 +0000

Labour has promised a “revolution” in the mortgage market to open the door to 25-year fixed-rate mortgages for millions of homeowners.

Outlining her plan at the weekend, shadow chancellor Rachel Reeves said longer fixed-rate deals would enable people to buy houses with smaller deposits and with lower monthly repayments.

Longer mortgages are common in countries like the US, Canada and Japan, but unlike in some of those, Labour is not proposing they be underwritten by the taxpayer.

Ms Reeves has asked those involved in carrying out a Labour review of financial services to work with the mortgage industry to find ways to remove regulatory barriers and help trigger a broader cultural shift.

Sky News’ Money team asked three industry experts whether they could take off.

Richard Donnell, head of insight at Zoopla, tells Sky News it is a “good idea”, but the challenge will be ensuring rates are as competitive as shorter-term deals, otherwise people won’t be willing to take them out.

The main advantage, he says, would be for first-time buyers.

“Today, the cost of a mortgage and renting is the same, even at 4.5% mortgage rates, but new borrowers are being stress-tested as to whether they can afford 8% to 9%,” he says.

The risk of high mortgage repayments means purchasers – especially first-time buyers – are finding it harder to get on the ladder. As they struggle to get a mortgage, rents have also been rising, leaving people with less in savings. Combined with historically high house prices, first-time buyers are finding it had to put aside the bigger deposits.

“The advantage of long-term fixes is it means you probably avoid the need to stress-test affordability,” Mr Donnell says.

“I believe the government needs to look at how it can support the market for longer-term rates to develop at rates that will support demand for this type of product, as it’s a big mindset change.”

Would Britons really want to lock in?

Kevin Roberts, managing director at Legal & General Mortgage Services, isn’t convinced as things stand.

“It is worth noting that 25-year fixes are already available in the UK, but receive relatively little interest. Typically, people tend to choose the product that offers the lowest rate at that time, and that’s usually a shorter-term product, such as a two or five-year fix,” he said.

David Hollingworth, a director at L&C, agrees.

“There’s potential to grow this sector but until pricing and tie-ins are addressed they may continue to be a useful niche option rather than a market wide choice,” he said.

Two other major drawbacks

Mr Hollingworth highlights another issue.

“Longer-term fixed deals will often tie the borrower in with an early repayment charge throughout the fixed-rate period,” he said.

So if a mortgage needs to be reviewed at some point, perhaps because someone wants to move house, options become more limited.

“Even though deals can be taken to a new property there is no guarantee that the borrower will still meet the lender criteria at that time, or whether the lender will have competitive rates for any additional borrowing.”

Perhaps more obviously, there is also the concern that rates may fall significantly, as happened after the 2008 financial crisis.

“There may be some concern that they will be left high and dry if rates were to subsequently fall,” says Mr Hollingworth.

What’s already on the market?

The most common longer fix is 10 years. First Direct currently offers a fixed rate of 3.99% over 10 years for a 60% loan-to-value mortgage.

Perenna is a new lender targeting the long-term market, offering rates that are fixed for as long as 40 years but that only tie the borrower in for the first five. They currently offer a 25-year mortgage at 5.75%.

Perhaps recognising the early repayment charge (ERC) issue highlighted above, Kensington Mortgages offers fixed rates for the life of a mortgage and although there are ERCs, they are waived in certain situations – like a house move or sale/repayment.

Who could they benefit?

As discussed, first-time buyers struggling to get on the ladder – but also people who want long-term certainty and perhaps have no intention of moving.

“For example, if they are saving for a wedding in X years’ time, it could be handy to know how much they’ll be able to put away each month if what’s likely to be their biggest expense, their mortgage repayments, stay the same,” says Kevin Roberts, from L&G.

Source: News Sky

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