European Commission tells UK to rein in housing boom
03 Jun 2014
The Help to Buy scheme, council tax and house building all require reform, says the European Commission (EC), as average UK house prices reach an all-time high.
The EC called for Chancellor George Osborne to ‘deploy appropriate measures’, adding: ‘The authorities should continue to monitor house prices and mortgage indebtedness and stand ready to deploy appropriate measures, including adjusting the Help to Buy 2 (loan guarantee) scheme.
Reforms to the taxation of land and property should be considered to alleviate distortions in the housing market. At the moment, increasing property values are not translated into higher property taxes as the property value roll has not been updated since 1991 and taxes on higher-value property are lower than on lower-value property in relative terms’.
Nationwide reported that house prices have risen for the 13th consecutive month, bringing them to an average of £186,512 – higher than the previous peak in 2007 before the financial crisis.
The EC report said the UK needs to ‘remove distortions in property taxation by regularly updating the valuation of property and reduce the regressivity of the band and rates within the council tax system’.