Building Growth: Country-Specific Recommendations 2014

On 2 June the European Commission published a series of economy policy recommendations to individual Member States in the form of country-specific recommendations. This is the culmination of the fourth European Semester of economic policy coordination. The recommendations are based on detailed analyses of each country’s situation and provide guidance on how to boost growth, increase competitiveness and create jobs 2014-2015. These, together with several decisions also adopted by the Commission on Member States’ public finances under the Stability and Growth Pact, represent an ambitious set of reforms for the EU economy.

This year the emphasis has shifted from addressing the urgent problems caused by the crisis to strengthening the conditions for sustainable growth and employment in a post-crisis economy. One of the factors considered is the housing market. Country-specific recommendations relating to the national housing markets have been issued to the Netherlands, Portugal, Sweden and the United Kingdom. These are: 

• The Netherlands: Step up efforts to reform the housing market by accelerating the reduction in mortgage interest tax deductibility, by providing for a more market-orientated pricing mechanism in the rental market, and by further relating rents to household income in the social housing sector. Monitor the effects of the social housing reforms in terms of accessibility and affordability for low-income households. Continue efforts to refocus social housing policies to support households most in need. 

• For Portugal: Further improve the evaluation of the Portuguese housing market, including by setting up, by the end of November 2014, a more systematic monitoring and reporting framework and issue a comprehensive report on the shadow economy in that market. 

• For Sweden: Further improve the efficiency of the housing market through continued reforms of the rent setting system. In particular, allow more market-orientated rent levels by moving away from the utility value system and further liberalising certain segments of the rental market, and greater freedom of contract between individual tenants and landlords. Decrease the length and complexity of the planning and appeal processes, by reducing and merging administrative requirements, harmonising building requirements and standards across municipalities and increasing transparency for land allotment procedures. Encourage municipalities to make their own land available for new housing developments. 

• For the United Kingdom: Increase the transparency of the use and impact of macro-prudential regulation in respect of the housing sector by the Bank of England’s Financial Policy Committee. Deploy appropriate measures to respond to the rapid increases in property prices in areas that account for a substantial share of economic growth in the United Kingdom, particularly London, for example by adjusting the Help to Buy scheme and mitigate risks relating to high mortgage indebtedness. Remove distortions in property taxation by regularly updating the valuation of property and reduce the regressivity of the band and rates within the council tax system. Continue efforts to increase the supply of housing. 

The country-specific recommendations will be discussed by EU leaders and EU ministers in June. They will be formally adopted by the EU’s Council of Finance Ministers on 8 July. Member States will then have to implement the recommendations in national budgets and policies for 2015.
More detailed information is available at .