EU urges UK to raise taxes on higher value properties
Britain must reform its property taxation policies if it is to amend soaring house prices according to a new report issued by the European Commission today.
Following a review of the UK in March, the EU concluded that the country is experiencing “macroeconomic imbalances”, particularly within the housing market, where a slow response to the “continual structural undersupply of housing” is leading buyers to accept higher mortgages, resulting in markedly high levels of mortgage debt.
In order to counteract these issues, the European Commission has advised a re-evaluation of land and property taxation in the UK and said: “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 due to the regressivity of the current rates and bands within the council tax system.”
The report also states that property prices in certain areas of the UK, notably London, have increased, placing particular blame on “low interest rates and easier terms for mortgage lending”.
In particular the EU suggests: adjustments to the government’s Help to Buy scheme, designed to make it easier for all property buyers; sustained efforts to increase the supply of housing; and greater transparency by the Bank of England in relation to the “use and impact of macro-prudential regulation”.
In addition to this, the report also outlines the UK’s various successes in areas such as affordable childcare and calls for increased measures to reduce unemployment and increase levels of vocational and technical skills.
The Commission’s economic suggestions have encountered fierce opposition by those who wish to reduce European influence in British politics.
In response to the report, chief executive of Business for Britain Matthew Elliot said: “Brussels appear not to have taken on board the message: Britain wants less interference from the continent, not more.”