Keeping mortgage interest relief approved

Published5 hours ago

A move to keep tax relief on interest paid on mortgage payments has been approved.

Deputy Aidan Matthews, who brought the amendment to the Budget in Guernsey, said it was currently the "worst possible time" to consider phasing out the tax relief. It also meant that the phased withdrawal of the relief, which was agreed in 2015, would also stop, it was confirmed.

The relief allows homeowners to apply for tax relief on any interest paid on the mortgage of their principle residence of up to £3,500 a year.

Speaking against the move, Deputy Neil Inder said that, while the idea was right in isolation, if all amendments were approved, it would add "£20m to the budget".

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Alderney representative Alex Snowdon said the timing of the amendment was "important".

He said: "There is a lot of Guernsey and Alderney people will be working two to three jobs that are really struggling to try and support the mortgage and their families.

"I think this sends a strong message that we are trying to do a little bit to try and help people who are going through a very difficult time.

"Some might say [these are] normal interest rates, but we've had money so cheap for so long that we are getting back to more difficult interest rates because house prices are going up so much people are borrowing so much more money."

'There is inequality'

Deputy Jayne Ozanne said in the debate that she was "very split" on the amendment because it was an "unfair advantage" to homeowners over renters.

"This will not solve the crisis of people leaving the island," she said.

"They can not afford to save for a deposit for a mortgage because they are paying such high rents," she said.

"Their monthly outgoings does not allow them to create the capital egg that they need to put a deposit down. This will not help that; it may help them once they've got a mortgage to decide to stay.

"I'm wrestling because I feel there is an inequality here... the average rent in the island is over £2,000 per month while the average mortgage, I believe, is £1,000.

"But two wrongs don't make a right. I recognise that families are feeling squeezed."

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Related topics

States of Guernsey

Mortgages

Tax

Housing market

Renting

Cost of Living

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