Will we look back at the decision this week by
What else can be done to avoid an almighty pile-up?
1. Cap income multiples at three times first income and one times second
Pros: It was the standard cap until the early 1970s and kept prices in check. Forget all the huff and puff about
Cons: It will kill the market in depressed areas, but do little to deflate
2. Limit mortgages to 25 years
Pros: Stretched borrowers are now taking out 30, 35 and even 40-year duration mortgages. Both
3. Raise capital gains tax to 100% on second properties
Pros: It would kill much speculation stone dead, while leaving the core residential market untouched. Cons: Issues around divorce, inheritance, holiday lets.
4. Regulate buy-to-let
Pros: The mortgage market is like a four-lane highway: the three lanes occupied by conventional buyers are regulated (with the new affordability tests) while the other lane, reserved for landlords, can do whatever it likes - crucially they are allowed to take out cheap interest-only loans when these are banned for first-time buyers. Bring buy-to-let under the
Cons: It will reduce the availability of rental properties.
5. Introduce rent controls
Pros: An alternative way to deter landlords, making purchases financially unviable.
Cons: Properties will become dilapidated, as landlords won't be able to afford to maintain them.
6. Red-line hotspot areas
Pros: Lenders could be ordered to halt or cut back lending volumes in high-stress areas such as
7. Build more
Pros As the Bank of
Cons: Listen to the likes of
8. Ban foreign purchases:
Pros: Global capital is using
Cons: We already charge 15% stamp duty on foreigners buying a home through a company, and that hasn't stopped them.
I could go on . . . 9. Reduce immigration and thus limit the demand for rental properties. 10. Junk Help to B uy. 11. Move more government jobs out of
What do you think might work?
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