§ Mr. Rookerasked the Secretary of State for the Environment what assessment he has made of the influence of housing land price inflation on the level of expenditure on (a) housing benefit and (b) mortgage interest tax relief.
§ Mr. John PattenThe level of mortgage tax relief is determined by mortgage interest rates, tax rates, the size of mortgages raised relative to the price paid for the houses being bought, as well as by house prices. What determines the level of house prices is itself a complex matter and the cost of land is only one component.
The connection between the price of housing land and expenditure on housing benefit is even more tenuous. This is particularly so because most housing benefit is paid to tenants or residents of dwellings which are long established and for which current land prices are not a relevant consideration: capital expenditure by local authorities on land for new building is much smaller than their expenditure on their existing houses and flats.
No reliable estimate can therefore be made of how far movements in the price of housing land have influenced expenditure on housing benefit or the amount of tax relief on mortgage interest.