I’m indebted to one of the most enthusiastic estate agents I’ve had the pleasure of meeting for suggesting the subject of this column.
He’s come up with an idea that, like many things, may well come back into fashion – and just in time for the new Prime Minister to consider.
That agent is Andrew Bullivant, partner in the Attwell Martin agency in Plymouth, and his idea is one with national application – why don’t we bring back MIRAS?
For readers below a certain age MIRAS was Mortgage Interest Relief At Source, a clunky title for an interesting idea: back in 1969 it was introduced by a then-Labour government to promote ownership through offering tax relief on the interest payments of house loans, being rapidly extended under the Thatcher administrations of the 1980s.
It was retained by Conservative and Labour governments alike before being modified in the 1990s and then abolished completely in 2000 by the Blair government, which culled it after the relief was described (by many politicians of all parties) as a middle-class perk.
So is it time now, with an economy arguably in grave peril because of Brexit, to bring this back as a fillip to the housing market and a 21st century endorsement of home ownership?
Of course those who want no government interference in the operations of the free market, MIRAS is anathema – but surely it would be a lot fairer and far more effective than the raft of interventions we already have?
Help To Buy, although undoubtedly of use to some young purchasers, has perhaps been most successful for boosting up the share prices of housebuilders; Right To Buy may have been a liberating force for some council tenants 30 years ago but now seems little more than a way of helping would-be landlords asset-strip the national housing stock; and as for Shared Ownership...well, restrictions on owners and difficulties in stepping up the share of ownership are well-known, and difficulties in re-selling have become legendary.
So by contrast, what would be so wrong with MIRAS?
A key argument ‘against’ would be that interest rates are tiny now anyway, so giving tax relief on them would have little effect. Well yes they are, but that is unlikely to stay the case for long – remember the series of warnings recently made by Bank of England governor Mark Carney that rates are likely to rise in the future. MIRAS might encourage buyers who are currently deterred by what might be to come in the next two to four years.
Another argument against it would be that it would benefit the wealthiest as well as the less affluent. Well, perhaps, but for a start it could be targeted at some kinds of buyers – first timers, those purchasing beneath a specific price threshold, and so on. And don’t forget, many of the wealthiest owners and buyers no longer have mortgages anyway: the latest data, from 2014, shows 7.4m outright owners and 6.9m owners with mortgages.
A third contention is that MIRAS would apply across the market and not specifically target key sectors, particularly new-builds. Well in a way that’s the point – new-build developers done well under Help To Buy (without necessarily helping the national housing shortage, by the way) so why not use MIRAS to spur transactions of all homes, not just new ones?
MIRAS would not be a silver bullet, of course.
The possible downsides of Brexit to the housing market may well take a lot more than one measure to address. But it would be a positive help for agents and buyers and a sign by a new government that it recognises the housing market needs some help.
There’s a lot in Theresa May’s in-tray right now. But how about MIRAS being an initiative from her new housing minister?
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn