§ Mr. George HowarthTo ask the Chancellor of the Exchequer what is Her Majesty's Government's policy on setting a maximum acceptable annual loss to the Exchequer from mortgage tax relief.
§ Mr. Norman LamontThe Government remain committed to mortgage interest relief in helping people acquire their own homes. But relief remains confined to loans up to the loan relief limit, which is fixed each year and is currently £30,000.
§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer if he will estimate the number of people applying for(a) one set of mortgage tax relief on a property, (b) two sets of mortgage tax relief on one property and (c) three or more sets of mortgage tax relief on a property in 1987–88 and the cost to the Exchequer of the tax relief on the mortgages in excess of one per property.
§ Mr. Norman Lamont[holding answer 12 April 1988]: In 1987–88 there are estimated to be a total of about 8.4 million tax units benefiting from mortgage interest relief. Although firm information is not available, it is tentatively estimated that about half a million of these tax units (excluding married couples) are involved in multiple borrower mortgages. It is not possible to provide a breakdown of this estimate between the number of tax units involved in mortgages with two unmarried sharers and those with more than two unmarried sharers.
The direct revenue cost in 1987–88 of the additional mortgage interest relief which is available to sharers is estimated to be of the order of £25 million.
§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer if he will give the cost or saving to the Exchequer of(a) the changes to the mortgage tax relief given in the Budget and (b) limiting mortgage tax relief to £15,000 per person whether married or single.
§ Mr. Norman Lamont[holding answer 12 April 1988]: The estimated yields arising in 1988–89 and 1989–90 from the changes to mortgage interest tax relief which were proposed in the Budget are:
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£ million 1988–89 1989–90 Mortgage interest relief ceiling applied to residence negligible + 25 Abolition of tax relief on new home improvement loans + 80 + 200 Abolition of tax relief on new loans for homes for dependent relatives and divorced or separated spouses negligible negligible It is estimated that the direct revenue yield in 1988–89 of the restriction of mortgage interest relief to a loan of up to £15,000 per individual would be about £320 million. This estimate is based on the mortgage interest rate of 10.25 per cent. prevailing at the beginning of 1988–89 and on the assumption that the new ceiling would apply to both existing and new loans. No account has been taken of any consequential changes to the distribution of mortgages.
§ Mr. George HowarthTo ask the Chancellor of the Exchequer what is the most up-to-date estimate available on the inflationary effects of mortgage tax relief on house prices.
§ Mr. Norman LamontHouse prices are affected by a large number of factors including disposable income, the cost and availability of mortgage finance and changes in the number of households. I am not aware of any recent study which concentrates on the effect of mortgage interest relief.
§ Mr. George HowarthTo ask the Chancellor of the Exchequer what is the most up-to-date estimate of the annual loss of revenue to the Exchequer as a result of mortgage tax relief.
§ Mr. Norman LamontThe direct revenue cost of mortgage tax relief in 1988–89 is estimated to be £4.25 billion. This estimate takes account of the recently announced reductions in the mortgage interest rate.