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Osborne urged to rein in Help to Buy by European Commission

Commission says action is needed to control house prices

The Treasury has been urged by the European Commission to rein in Help to Buy 2 to curb house price rises in the UK.

The commission has called on the Government to respond to surging house prices by increasing the supply of property, raising council tax on expensive properties and
adjusting the Help to Buy 2 loan guarantee scheme. 

The proposals are outlined in a document which advises member states on how to achieve long-term economic growth. It says: “The commission recommends the UK deploy appropriate measures to respond to the rapid increases in property prices in areas that account for a substantial share of economic growth, particularly London, for example by adjusting Help to Buy 2, and mitigate risks related to high mortgage indebtedness.”

The EC adds that “action is needed” to further boost property supply, such as by creating appropriate incentives at a local level. 

Chancellor George Osborne has been warned by economists that Help to Buy could lead to a housing bubble. Figures published by the Treasury last week show that 7,313 mortgages have been backed by Help to Buy 2 in the six months since launch last October.

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