Housing

Tax Strategy Group: VAT cuts could cause spike in house prices

Group report says past experience ‘strongly suggests the need for a cautionary stance’ on tax incentives in housing sector in Budget 2024

Tax Strategy Group: “Reports generally indicated that tax reliefs in the property sector contributed to the property bubble and to a more general misallocation of resources.” Picture: Getty

The government has been warned there is “strong evidence” that further tax measures should not be used in the housebuilding sector, with a cut in VAT likely to cause a spike in house prices.

The Tax Strategy Group, which is made up of staff from different government departments, has published a series of papers ahead of Budget 2024, including one document focused on taxation of housing and construction.

The government has applied a variety of ...