November 15

Urgent Appeal: Restore Mortgage Interest Relief


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In anticipation of next week’s Autumn Statement, Dominic Agace, the chief executive of Winkworth, is drawing attention to the pressing need for the reinstatement of Mortgage Interest Tax Relief, particularly for investors in the property market. While the public discourse often centers around potential changes in inheritance tax and stamp duty, Agace contends that these issues may be more focused on political maneuvering rather than addressing the practical challenges faced by landlords.

Agace’s emphasis on Mortgage Interest Tax Relief reflects a nuanced perspective on the impending fiscal changes. Rather than viewing them as mere electioneering slogans, he underscores the importance of concrete measures that directly impact landlords, whose role in the property market is substantial. By advocating for the reinstatement of this tax relief, Agace seeks to address the financial strain faced by investors and foster a more supportive environment for property owners.

The discussion around potential fiscal changes has generated considerable speculation, but Agace’s focus on Mortgage Interest Tax Relief brings attention to a specific area that could significantly influence the property market’s dynamics. As the Autumn Statement approaches, his stance highlights the need for a targeted and practical approach to support landlords, recognizing their contribution to the broader economic landscape. In doing so, Agace positions the reinstatement of Mortgage Interest Tax Relief as a key factor in ensuring the stability and growth of the property market.

Winkworth’s chief executive underscores a pressing concern for landlords—rising finance costs, which he insists should take precedence in the forthcoming Autumn Statement. The increasing financial burden has prompted many landlords to offload their investments, despite notable spikes in rental rates. The elimination of mortgage interest rate relief compounds these challenges, especially evident in the challenging London market. A potential solution lies in the restoration of mortgage interest relief, a measure anticipated to bring about positive changes by fostering increased property supply and easing rental market pressures.

In a recent podcast from his agency, the chief executive provides insights on the current economic landscape, emphasizing the peak stress in interest rates at the pinnacle of the cycle. With a prediction of inflation dropping below five per cent, the anticipation of an economic upturn is palpable. However, he cautions against altering this trajectory for short-term political gains, stressing the importance of maintaining stability.

While discussions often revolve around inheritance tax and stamp duty as potential areas for fiscal adjustments, the CEO questions their effectiveness and labels them as possible electioneering promises. He argues against income tax cuts and VAT reductions, considering them potentially inflationary and counterproductive. Specifically, he highlights the impact of aggressive stamp duty tax increases on London families and expresses skepticism about imminent changes positively impacting the property market in the coming year.

Highlighting the core challenge in the property sector, the CEO underscores the financial obstacle posed by the cost of finance. He categorizes this as more than a mere transactional hurdle, framing it as a substantial issue affecting income and cash flow. The CEO advocates for policies that can drive inflation down to a target, fostering a subsequent reduction in interest rates. This, he believes, will prompt banks and mortgage providers to follow suit, ultimately lowering costs for individuals invested in the property market.

Turning attention to the outlook for 2024, the CEO expresses a sense of positivity, particularly in the second half of the year. Contrary to earlier predictions, the market has demonstrated resilience beyond expectations. Despite a significant deceleration marked by a 12 percent increase in flat prices year on year until August, a subsequent four percent decline has occurred, though this trend is not mirrored in house prices.

In his assessment, the CEO outlines the intricate dynamics affecting the property market. He identifies the critical role of policies in influencing inflation and interest rates, shaping the trajectory of costs for those engaged in property transactions. The unexpected resilience in the market prompts a reconsideration of earlier predictions, indicating a more nuanced landscape than initially anticipated.

“This comes back to the mortgage market and stress testing, which has gone on since 2015. At the moment, prices are reducing, but it’s a transactional challenge rather than a dramatic price change.  We haven’t seen a price reduction in the past six months. On the buying side, we saw real wage growth above inflation wage growth, which is a positive. 

“Looking forward, we are looking at interest rate cuts towards the second half of next year and mortgage rates moving down to around 4.5 percent. The property market is aligned with employment—the two critical factors in a successful, stable property market. The property market doesn’t stay in limited activity mode forever. Two years is a long time if you look at historic trends.  Next year and certainly towards the second half, we will see a more positive impetus in the property market.” 



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Autumn Statement, Mortgage Interest Tax Relief, Urgent Appeal: Restore Mortgage Interest Relief

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