SCRAPPING a key tax break for landlords could lead to higher rents and disrupt Jersey’s housing market, according to the government’s chief economist.
Reform Jersey’s Deputy Catherine Curtis is seeking to stop landlords from deducting mortgage interest from rental income when calculating tax – a relief she described as “inequitable”.
But Treasury Minister Elaine Millar has said there are “no tax policy reasons” to remove the relief.
In a comments paper urging States Members to reject proposals from Reform Jersey’s Deputy Catherine Curtis to remove mortgage interest tax relief for buy-to-let properties, Deputy Millar referred to a Treasury report prepared for government in early 2026.
In it, the government’s Chief Economic Adviser, Tom Holvey, states: “Removing interest deductions will leave landlords with mortgages with a higher tax bill and
lower profits. All else being equal, such landlords can be expected to increase rents to offset the reduction in profit. However, the restrictions on rent increases in the Residential Tenancy Law, which is likely to come into effect by April this year, might act to cap rent increases to RPI. Alternatively, landlords might sell their properties.”
“Changes to interest deductions will reduce the attractiveness of housing as an investment opportunity and potential landlords may be deterred from becoming landlords,” he added. “The change is likely to dampen demand from private landlords for new buy-to-let properties and slow down the recovery in the housing market. This might be to the benefit of owner-occupiers if the number of houses for sale is increased, and as the reduced demand from landlords means prices rise by less than they would otherwise. However, the overall effect on the economy is uncertain.”
The report also referred to responses from a consultation, including those from representative bodies, indicating a strong preference for interest to remain available as a deduction.
“The conclusion of this report is that interest should continue be fully deductible.
This reflects the outcome of the consultation; the nature of the expense as being
incurred in the course of business; and takes account of the cumulative impact
of recent and upcoming changes affecting the housing market,” the document read.
“In light of these conclusions,” Deputy Millar said, “Members are asked to reject this proposition to avoid the ‘damaging unintended consequences’ that this review was established to assess and prevent.”
Housing Minister Sam Mézec, however, has given his strong backing to his fellow Reform deputy’s plan.
In his own comments paper, Deputy Mézec said: “Although my position differs from that of the wider Council of Ministers, I have consistently made clear my view that allowing buy-to-let investors to deduct interest payments on their mortgages from their rental income is unfair.”
He argued that “the majority of landlords would not be affected” by the change, as “around 80% of rental properties in Jersey do not have a mortgage attached to them, meaning only about 20% of landlords currently benefit” from the relief.
Rejecting the government economist’s view, he said the “idea that rents would
automatically rise across the board does not reflect the reality of the market”.
Arguing that the £2m cost of the relief “could be better used elsewhere”, the Minister concluded: “My hope is that this Proposition will continue to help rebalance the buy-to-let market, bringing greater fairness between home owners and investors, ending subsidies for
personal borrowing choices, and supporting a more sustainable housing market.”
