Mortgage interest tax relief on second homes

Clive Akerman

I propose a doubling of mortgage interest tax relief, subject to some simple restrictions.

If an individual has lived in a housing stress area (designated by ministerial decree and defined as one where there are more potential households than homes; basically the South East of the country) in an owner-occupied home for a minimum of, say, five years, then the tax concessions on that home should be retained and duplicate concessions made available for a second home in the provinces - provided that tthe second home became the prime residence and the original residence were rented via a recognised housing association.

This would encourage a job-seeker to move out of an area with the highest pressure on housing, would free a home for rental in the most stressed area, and more important, provide a safety net should the individual require to return to the South East in pursuance of his or her career. The cost to the community would be two sets of mortgage interest tax relief - which is not, in fact, a lot of money as the standard rate of tax is reduced. (The maximum is, I believe, 40% top tax rate x L30,000 limit on relief x 10% say, interest rate per annum = L1,200 a year.)

'The solution has three major benefits - it is simple, it is cheap and it could be put into effect very quickly and easily'

Such an approach does not call for many new houses, and those which are built will be in areas of low land and labour costs. We will reduce pressures on Green Belts; we will be making a valuable move towards homogenising the country and reducing the problems of success in the South East; a new town will no longer be needed in Stowmarket, Suffolk; we would free a great deal of housing in areas of greatest need; we would improve the quality of life of many people. And the 'solution' has three major benefits - it is simple, it is cheap and it could be put into effect very quickly and easily.

Clive Akerman, 92 Sandbrook Road, London N16 OSP (tel 071 241 0866).


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