The move is seen as a bid to win over younger voters and pull ahead of the Conservatives, as polls continue to show the two parties neck-and-neck with just 10 days to go until the General Election.
Labour says the plan will save up to £5,000 for those getting on the first rung of the property ladder.
Speaking in Stockton-on-Tees today, party leader Ed Miliband will say: “We’re going to act so we can transform the opportunities for young working people in our country.”
Today’s announcement includes giving first-time buyers who have lived in a region for more than three years first call on up to half of the homes built in their area.
Labour will also try to prevent foreign buyers from taking up properties before local residents have had a chance to do so, by ensuring the properties are advertised in local areas, by increasing the taxes levied on foreign buyers and by upping council tax on empty homes.
Miliband’s party has already said it would build 1m new homes over the course of the next parliament, as housing becomes an increasingly key issue in the knife-edge campaign.
In an attempt to woo the country’s 11m private tenants, Miliband announced yesterday that rents would be linked to inflation under a Labour government.
Conservative housing minister Brandon Lewis criticised the plan, saying: “Rent controls never work – they force up rents and destroy investment in housing leading to fewer homes to rent and poorer quality accommodation.
“The only way to have affordable rents is to continue to build more homes,” Lewis added. The Lib Dems also attacked the plan, calling it “ill thought-through,” while various housing groups also disapproved.
“Capping rent inflation through three-year fixed tenancies is likely to impact on investment into the existing quality of homes in the rental sector and could force smaller landlords to exit the market,” said Royal Institution of Chartered Surveyors’ head of policy Jeremy Blackburn.
Yet housing charity Shelter gave the plan the thumbs up. “For a long time Shelter has campaigned for a new five-year tenancy in which rents can’t rise by more than inflation, so any move that brings this nearer is welcome.”
Meanwhile, the Conservatives will today launch a small business manifesto in London as they kick off a week focused on economic policies. The small business initiative will aim to help 600,000 new businesses get off the ground every year by the end of 2020.
Visit our General Election poll tracker to see how the polls changed in the build-up to election day.