Subsidies to Owner-Occupiers: Some Estimates from Data on Individual Households

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Abstract
In this paper, the subsidies accruing to owner-occupiers in the Newcastle travel-to-work area (TTWA) for the period 1985–87 is examined. Data at the micro level from two building societies are used to produce estimates of the impact of mortgage-interest tax relief at source and the nontaxation of imputed rent. The overall level of subsidy is shown to have fallen through time and the greatest relative subsidies are given to households with the smallest taxable income. The effect of the income elasticity of demand for housing on subsidy levels is considered and an estimate of the income elasticity of demand is produced for the Newcastle TTWA. Finally, some spatial effects of housing subsidies are discussed.