Relief on 'all borrowing on new mortgages during the next three years' would pay handsome subsidies to at least three million purchasers - most of whom have no need of further hand-outs. Those able to afford the largest mortgages would get the biggest subsidies - five times as much for the pounds 250,000 purchaser as for the average first-time buyer. The arrangements would not save the 300,000 struggling home owners who cannot meet their existing mortgage commitments. The extra cost to the Exchequer would be about pounds 2bn per annum by year three. And removing this subsidy at a stroke after three years could produce another housing market collapse.
In 1985 and 1991 the two reports from the Inquiry into British Housing chaired by the Duke of Edinburgh, recommended a switch from Miras to support targeted on those with low incomes.
Research from Janet Ford and Steve Wilcox, published this month by the Joseph Rowntree Foundation, shows that four-fifths of borrowers in arrears to the Nationwide Building Society were in employment: but though their income was low, they had no entitlement to help with the mortgage. Helping these borrowers helps the whole economy: restoring confidence and stability in the market requires an end to the huge problems of mortgage arrears, possessions and forced sales.
Several rescue measures could be useful. But mortgage benefit is the key. The introduction of mortgage benefit, just like housing benefit for tenants in the same circumstances (and full take-up of the family credit many are failing to claim), would provide adequate resources for 82 per cent of those affected. The visible cost would be significant - pounds 600m to 800m - but this subsidy is concentrated where it is needed, in contrast to proposals for more costly and wasteful general tax relief.
Joseph Rowntree Foundation