THE government is facing calls to provide direct help to households hit with massive mortgage-payment rises following the single-biggest increase in the UK’s base rate for three decades.
Islanders on tracker or variable rates are now paying hundreds of pounds more each month than they were at the start of the year, adding further financial strain on homeowners already facing huge hikes in food and energy costs.
Now Deputies Lyndon Farnham and Reform Jersey’s Lyndsay Feltham have separately called for the government to consider expanding the interest tax relief scheme.
The initiative enables Islanders to claim tax relief on loan interest payments for the purchase or extension of their main property, although the amount of relief available is reducing by £1,500 each year until it is phased out completely in 2026.
Deputy Farnham added: ‘The government must be mindful of the huge pressures [the rise in costs] is going to place on Islanders with mortgages, and must be prepared to help during this period of high interest rates. I look forward to hearing the Treasury Minister’s thoughts on the matter.’
However, he said it was ‘too early to say’ whether he would bring an amendment to the government plan calling for increased tax relief.
Deputy Feltham said: ‘What Deputy Farnham is saying is sensible in relation to homeowners, and could be worth looking at because implementation might be fairly simple. We also need to be aware of the potential impact [of the increased rates] on rental prices. It is not just homeowners who will be affected, as landlords seek to maintain their profits.’
She added: ‘The solution proposed by Deputy Farnham may be part of tackling the wider issue but will not solve it in its entirety.’
Following the Bank of England’s decision to raise the base rate to 3%, Housing Minister David Warr urged lenders to show ‘compassion’ to Islanders who defaulted on their mortgages.
His comments came just a day after Skipton International announced a pre-tax quarterly profit of £11.4 million, saying that its mortgage book had ‘sustained its performance’, with 2022 lending up to end of September recorded at £334 million compared to £376 million for the full year in 2021.
Jim Coupe, the bank’s managing director, said it was ‘on course for a record-breaking 2022’.
Treasury Minister Ian Gorst said: ‘Officers are in conversation with Island banks, which have assured the government that they will work with their customers to keep them in their homes wherever that is most appropriate and achievable. We will continue to monitor the situation.’
He said that the rising interest rates ‘were already anticipated’ when the government brought forward its mini budget, which included a range of measures to help Islanders with the cost of living.
‘Officers across the Treasury and Economy departments are monitoring the state of flux around the UK finances and how it could affect Islanders. There are a number of plans being considered,’ he added.
