Guernsey Votes to Keep Mortgage Interest Tax Relief
A Budget amendment halts the planned phase-out of relief worth up to £3,500 a year. One deputy warned that all Budget amendments together would add £20m, and another said the relief favours homeowners over renters.
Guernsey politicians have approved a Budget amendment that keeps tax relief on mortgage interest. The change also halts the phased withdrawal of the relief, which was agreed in 2015.
Homeowners and renters
Deputy Jayne Ozanne questioned the relief in the debate. She said she was very split on the amendment because it gives homeowners an unfair advantage over renters. In her view it would not solve the problem of people leaving the island.
Her reasoning was about deposits. High rents, she said, leave people unable to save the capital for a mortgage, and the relief does nothing for them. It may, however, help those who already have a mortgage decide to stay.
She gave figures for the gap: an average island rent of over £2,000 a month, against what she believed is an average mortgage of £1,000. Yet she added that "two wrongs don't make a right", and said she recognised that families feel squeezed.
The cost question
Deputy Neil Inder spoke against the move. He said the idea was right in isolation, but that if every amendment to the Budget were approved, they would add £20m to it. That figure covers the whole set of amendments, not this one alone.
Borrowers under pressure
Alex Snowdon, who represents Alderney, argued that the timing was important. He said many Guernsey and Alderney people work two or three jobs and are struggling to support their mortgages and families. For him, the vote sends a message that politicians are trying to help people through a hard period.
He addressed the point that today's rates may count as normal. Money was cheap for so long, he said, that the return to higher rates is difficult, and the borrowing involved is larger because house prices have risen so much.
What the amendment does
Homeowners can claim relief on mortgage interest for their main residence, up to £3,500 a year. Deputy Aidan Matthews, who brought the amendment, said it was the "worst possible time" to consider phasing the relief out. With the vote passed, the withdrawal scheduled under the 2015 decision stops as well.
Our View
The relief helps only people who already hold a mortgage, so Ozanne's point about renters and deposits is untouched by the vote. The cost of this amendment alone has not been stated: Inder's £20m is a total for all of them. The report does not say what each amendment would cost on its own.
Source: BBC News