MIRAS Down - Stamp Duty UpIn his own words
Gordon Brown has reduced mortgage tax relief (MIRAS) from 15% to 10%. The move, which is a continuation of the last Government's policy, was widely predicted although some believed that he may have reduced the rate further or even abolished MIRAS altogether. The reduction will take effect in April 1998.
It is thought that the new rate will cost ten million homeowners about £10 per month once it takes effect.
An increase in stamp duty was also introduced although it was less wide ranging than many expected. The duty was raised by 0.5% to 1.5% on properties over £250,000 and doubled to 2% on properties over half a million pounds.
This will have a significant effect on whoever buys Tony Blair's five-bedroom Islington home, currently on the market at £615,000.
The reaction from lenders tonight was that although the changes were disappointing, they could have been much worse and are unlikely to undermine the recovery in the housing market.
Matthew Ryall, an economist from the Royal Institution of Chartered Surveyors, said that the changes were "nowhere near as bad" as some pre-budget predictions.
"Local authorities will have borrowing consents for an additional £900 million - £200 million this year and £700 million next year - for building new houses and repairing existing stock." the Chancellor said.