UK house prices
Budget 2014: UK Foreign Property Tax: A residential street is seen in Notting Hill in central London. Reuters

Chancellor George Osborne said he had reiterated concerns over the housing market to the Bank of England, and added that the foreign property tax is still to come into force in the future.

"I today re-confirm my remit for the Monetary Policy Committee, including the target of 2% Consumer Price Index inflation – which the Office for Budget Responsibility expect will be met this year, next year and in the years ahead," said Osborne.

"Although the OBR forecast that house prices will remain below their real-terms peak until at least 2018, I have asked the Committee to be particularly vigilant against the emergence of potential risks in the housing market."

Halifax said UK house prices rose sharply across the year in February amid the housing market recovery.

According to the building society's monthly index, the average price of a UK home was 7.9% higher than a year before, at £179,872.

In Osborne's Autumn Statement last year, he revealed that foreign property investors would have to pay capital gains tax (CGT) in a bid to prevent a housing bubble from forming and to rake in lucrative reserves for the Treasury.

The chancellor said at the time that that CGT would be levied on foreign owners at the same rate as for UK residents.

"Britain welcomes investment from overseas but it's not right that those who live here have to pay CGT, but those who are non-residents do not," said Osborne.

"From April 2015, non-UK residents will have to pay CGT on property in Britain, including selling of that property."

People living in Britain pay 18% CGT and 28% if they make a profit when reselling a property that is not classified as their main home.

People who own properties in the UK and are deemed non-residents are currently exempt from CGT.

In November last year, Deputy Prime Minister Nick Clegg said "We certainly need to make sure that people who invest very large amounts of money into property in central London their fair share of tax in those transactions."

"That is why we are looking at options like a differential application of CGT to those kind of transactions."

He added that an influx of foreign money had left parts of the London property market "divorced from and dislocated from the rest of the economy".