In what some consider a poorly-timed intervention, the European Commission says the UK's Help To Buy must be scaled back to avoid a housing market bubble.
The commission, which often issues statements about member states' national economic policies, says the UK government must deploy appropriated measures to respond to the rapid increases in property prices in areas that account for a substantial share of economic growth in the UK, particularly in London.
The report on the UK is wide-reaching and also tells this country to tackle child poverty, reduce youth unemployment and increase the availability of childcare.
The commission singles out Help To Buy 2, under which the Treasury lends up to 15 per cent of a property's price, as needing change to mitigate risks related to high mortgage indebtedness.
The commission's report reads: The risks in the housing sector relate to a continuing structural undersupply of housing; intrinsic supply constraints, particularly in London, and the relatively slow response of supply to increases in demand continues to drive house prices higher.
In another suggestion, the commission wants more house building and an end to what it calls distortions in the council tax banding system. The EU says that because council tax has not been reformed for over 20 years, it effectively under-taxes' high-end homes.
The report reads: 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 commission's intervention in the UK housing market comes less than two weeks after European elections in which UKIP proved the most popular party in this country.
Perhaps predictably, London Mayor Boris Johnson has dubbed the council tax call as a tax on London and has used characateristically colourful language to tell the bureaucrats where to put their proposal.
Comments
WE might be able to afford those things if we were not sending MILLIONS of our hard earned pounds to the EU!! So there. Butt out EU never voted for never asked for, unwanted and unloved. I don't mind voluntary collaboration, I do mind dictatorship.