A SECOND attempt by a Reform Jersey Deputy to remove mortgage interest tax relief for buy-to-let properties fell short in another close vote by States Members yesterday.
The Assembly rejected Deputy Catherine Curtis’s proposition to scrap the tax break for landlords by 21 votes against to 18 in favour with three abstentions.
A significant proportion of the back-and-forth during the debate centred around the interpretation of comments made by the government’s Chief Economic Adviser, Tom Holvey, cited in a Treasury report published earlier this year.
While he acknowledged it was “uncertain” what the overall economic impact would be, Mr Holvey anticipated that landlords with mortgages – who would be left with “a higher tax bill and lower profits” following the change – could increase rents as a result.
He also stated that changes would “reduce the attractiveness of housing as an investment opportunity” and that “potential landlords may be deterred from becoming landlords”.
Deputy Curtis told States Members that she was “disappointed to read the comments attributed to the Economic Advisor”.
“Not because I disagree,” she continued, “Of course, he’s right in what he says – I’m disappointed that the matter has been taken out of context and considered in a reductionist way.”
Deputy Curtis added: “Housing has become too expensive and therefore we should not be encouraging it as an investment above the needs of homeowners.
“If this is how government assesses policy and makes decisions, then no wonder we are in such a mess with too expensive housing and a high cost of living.”
External Relations Minister Ian Gorst, a former Treasury Minister – who was among those who voted against the proposition – said: “Responses were also received from local representative bodies and tax and accountancy firms, which expressed concern about disallowing interest as a business expense”.
He pointed to this as a key distinction in comparison to the decision to phase out mortgage interest tax relief for main residences agreed by the States Assembly ten years ago.
“One is as a business, and as a business means that interest expense can be an allowable deduction.
“That’s important, because that does actually directly feed into rents.”
