States pause could see £300 windfall for 1,500

The maximum value of mortgage interest relief was due to drop from £3,500 to £2,000 as part of the ongoing phasing out, which was set to end in 2025.

If the pause is approved, 1,651 people will remain unaffected, meaning that they will be £300 better off – £600 for a couple.

Tax relief on mortgage interest was described as ‘unfair and distorting’ when the Assembly approved its phasing out in 2015.

Members said it gave tax advantages to home owners and had a distorting impact on the property market.

Since then it has had little impact on people looking for a mortgage, said broker Pierre Blampied, managing director of SPF Private Clients.

‘A lot of people tend to ignore it, I don’t think they factor it into their equations because it’s been well known that it’s being phased out,’ he said.

The pause would be of benefit and help people at a time of rising inflation and rising interest rates.

‘But I doubt it’s going to have a massive impact on the housing market,’ said Mr Blampied.

The proposal to pause the move has been well-received generally.

‘I think the key reason they have made the decision [to propose it] is high inflation, and within that we have high interest rates.’

He said clients he saw were more concerned about the rates of interest, which Mr Blampied believes may change in the next couple of weeks. ‘That’s an educated guess,’ he said.

The phasing out of relief started in 2015, starting at £15,000. This affected 300 people and saw States revenues boosted by £200,000.

In 2023, if the States do not approve the pause, the maximum amount of mortgage interest deductible will be at £2,000. This would affect 4,986 people and make the States £2m.

If the pause is approved, the States will receive the same revenue as this year, £1.1m.

. The States’ Budget meeting is on Tuesday 1 November.