House prices 2: Europe wants to push council tax up

The European Commission has offered its advice on keeping house prices down. It won't go down well.

by Emma Haslett
Last Updated: 03 Jun 2014

Here’s a suggestion that’ll go down like Nigel Farage at Jose Manuel Barroso’s birthday party: raise council taxes. That’s what the European Commission thinks, anyway.

Each year the EC casts its grandfatherly eye over member states’ policies and offers its advice on the best ways to sustain growth. This year, it compiled quite a list for us Brits.

Firstly, it reckons council taxes need to go up.

‘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,’ it said, before presumably taking a few moments to recover its breath.

That’s fair enough on paper – but try explaining higher council tax bands to someone who paid tuppence ha’penny for a house in East London in the early noughties and now finds themselves living in a property worth £1m plus – even though they’re not earning much more than they did when they first bought it. Earnings haven’t risen as fast as house prices, either. So that’ll probably be a no…

Secondly, the EC criticised the Help to Buy scheme, saying the government 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, if deemed necessary’.

‘Action is needed to further boost the supply of houses – by creating appropriate incentives to raise supply at the local level,’ it added.

Considering George Osborne has apparently called an emergency meeting of housebuilders to discuss the lack of supply in the market, it sounds like housing is an issue the government is already pretty worried about. George Osborne probably didn’t need the EC to tell him about it…

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