Phase out mortgage tax relief, Brussels tells the Netherlands

The European Commission is poised to recommend the Netherlands phase out tax breaks on mortgages in order to keep house prices from imploding, according to media reports on Wednesday.


The commission will today publish its recommendations for improving all 27 EU economies. House prices in the Netherlands have been falling steadily for months.
According to the Volkskrant, Brussels believes the high house prices in the Netherlands are partly due to the mortgage tax relief system. In order to head off the risk of a house price implosion, as happened in Spain and Ireland, this ‘generous tax treatment’ should be phased out, the commission says.
Austerity package
The five-party austerity package drawn up at the end of last month will end the tax break on all new interest-only mortgages but current mortgages are unaffected. However, the central bank and other bodies have already called for reform and the issue is likely to be central to the general election campaign.
In addition, the commission says the government should do more to make sure tenants pay rent which is in line with their income. At the moment, landlords can only put up the rent of social housing by inflation.
Waiting lists for social housing can be up to 10 years in some towns and cities. For example, some 49% of cheaper rent-controlled properties in Utrecht are lived in by people who earn too much, according to city council research.