HC Deb 19 October 1973 vol 861 cc329-30W
Mr. Meacher

asked the Secretary of State for the Environment when last the option mortgage scheme ensured that a man buying a £9,000 house had his interest repayments effectively covered in full for the purposes of tax relief for each successive month: and since then by how much his interest repayments have risen.

Mr. Channon

This would depend on the rate of interest under the mortgage and on the borrower's taxable income.

Mr. Meacher

asked the Secretary of State for the Environment how many option mortgagors there are at the present time, what is their current average income, and how many have defaulted since interest rates rose above the ceiling for their receipt of full effective tax relief.

Mr. Channon

About 540,000 option mortgages had been taken out up to 30th June 1973, although some may have been terminated. No information is available about the current incomes of all existing option mortgagors. As existing mortgagors have to be given notice of an increase in repayments, the new mortgage rate recommended by the building societies is not yet in force. The issue of default on that score does not therefore arise.

Mr. Skinner

asked the Secretary of State for the Environment if he will consider assisting mortgagors with the implementation of the Merrett-Sykes proposals and of the Australian system.

Mr. Channon

The proposals made by A. J. Merrett and A. Sykes in 1965 in their book "Housing Finance and Development" have been to a considerable extent overtaken by the introduction of option mortgages, the proposal announced by my right hon. Friend the Prime Minister on 8th November for a deferred interest scheme which is being discussed with mortgage lenders, the Government's support of local authority building for sale announced in the White Paper "Widening the Choice" (Cmnd. 5280) in April, and the Government's encouragement of the sale of council houses to sitting tenants at restricted market value.

As far as the Australian system is concerned, the circumstances are entirely different from this country, where mortgages can already obtain tax relief on mortgage interest or the equivalent option mortgage subsidy.