Getting rid of a tax break for landlords could bring in £2 million-a-year for the public purse which could be redirected to key priorities, according to the Housing Minister.
Backing proposals from fellow Reform Jersey colleague Deputy Catherine Curtis to remove mortgage interest relief on buy-to-let properties, Deputy Sam Mézec argued that the break was unfair and “increasingly difficult to justify”.
Under current rules, landlords can deduct mortgage interest payments from their rental income for tax purposes – a relief no longer available to owner-occupiers after it was phased out.
“It is an inequity that families have lost this exemption… whilst those who already own their homes and acquire additional properties for profit can still access this tax benefit,” Deputy Mézec said.
He added that the current system creates “a clear disparity between ordinary home buyers and property investors”, with first-time buyers receiving less favourable treatment than those purchasing additional properties.
The Housing Minister also questioned the principle behind the relief itself, arguing that mortgage interest is not a cost that improves housing standards or tenant outcomes.
“It is simply the cost of acquiring a valuable asset,” he said, adding that taxpayers are effectively subsidising “a private financing decision that contributes to long-term wealth accumulation for a relatively small group of individuals”.
Making a financial case for reform, Deputy Mézec continued: “The relief costs around £2 million per year, and I believe those funds could be better used elsewhere if the relief is no longer delivering a clear policy objective.”
Deputy Curtis has similarly argued that the money “could be of great benefit through many different projects” if redirected.
Opponents of the change have warned that landlords may respond by creating less favourable conditions for tenants or withdrawing from the market entirely.
Among them was Treasury Minister Elaine Millar, who last week shared a warning from the government’s chief economist Tom Holvey that “changes to interest deductions will reduce the attractiveness of housing as an investment opportunity and potential landlords may be deterred from becoming landlords” and that this could ultimately “slow down the recovery in the housing market”.
However, both Deputy Curtis and the Housing Minister have suggested the impact would be limited.
Data from the Jersey House Price Index indicates that around 80% of rental properties are owned without a mortgage, meaning only a minority of landlords would be directly affected.
“As a result, the impact of removing it would be limited in scope, and the idea that rents would automatically rise across the board does not reflect the reality of the market,” Deputy Mézec said.
The proposal comes after a similar attempt to scrap the relief narrowly failed last year by just two votes, amid calls for further consultation.
While a government review has since taken place, Deputy Curtis has argued that progress has been too slow, noting that just 18 responses were received – the majority from landlords.
Deputy Curtis’ proposal is due to be debated by the States Assembly this week.
