I am aware of the recent upward trend in house prices. This trend is related to a number of factors, including low interest rates, rising real incomes and substantial increases in the number at work. House prices are set on the open market, and are not subject to any official controls. I will be keeping the situation in the housing market under active review with my colleague the Minister for the Environment. There are, of course, a number of official policy instruments which can affect the housing market, and their deployment from time to time can influence prices. In this context I expect that the increase in stamp duty on purchases of certain higher valued residential property which was introduced in the budget should have a moderating effect on price increases for such residential property.
Under the terms of Partnership 2000, wage earners can look forward to significant real increases in disposable income over the next three years, delivered through a combination of moderate nominal pay increases and substantial tax reductions.
I would draw to the Deputy's attention the fact that mortgage interest relief is available to any taxpayer in respect of interest paid on moneys borrowed for the purchase, maintenance, repair or improvement of that taxpayer's main residence. Relief is available in respect of allowable interest up to a ceiling of £2,500 for single persons and £5,000 for married couples. For first-time mortgage holders, 100 per cent relief is allowable up to the relevant ceiling for the first five years. Otherwise relief is allowable in respect of 80 per cent of the allowable interest reduced further by a de minimus exclusion of £100 for single persons and £200 for married couples.
The standard rating of mortgage interest relief on a phased basis is currently being implemented. In the tax year 1997-98 mortgage interest relief will be fully standard rated, that is, relieved at 26 per cent for all taxpayers. The current mortgage interest relief, which is estimated to cost the Exchequer around £110 million in the 1997 tax year, is of significant benefit to home buyers.