View more on these topics

Industry needs to cool itself

Policy is faced with a sectoral problem in the housing market, but interest rates provide only a system-wide policy tool. It is surprising that there has been almost no discussion of the obvious solution – temporary direct sectoral control on the providers of finance for house purchase. For example, higher capital requirements against housing loans by mortgage lenders and/or a higher percentage minimum downpayment from borrowers.

There are always problems – the level at which controls should be introduced; the danger in particular of having stood idly by until late in the boom (as now); problems of leakages and of equity in their incidence and the process of removing them in due course. But all of these are a small price to pay if steady cooling of the domestic property market could be achieved.

In the past, such direct credit controls had a bad name because they obstructed the free working of the capital market, which needed freedom after many years of controls during and after the Second World War. Now these markets have had many years of freedom but are using it to feed a de-stabilising sectoral boom – a degree of temporary obstruction would be entirely justified.

Roger Alford

Reader Emeritus

London School of Economics

Guildford

Surrey

Recommended

NAEA rejection disappoints RICS

The Royal Institute of Chartered Surveyors has expressed disappointment at the National Association of Estate Agents decision by the to reject its offer of RICS membership. The offer would have resulted in NAEA becoming wholly owned by RICS, responsible to the RICS residential faculty board. RICS says the linking of the two names would have […]

The amateurs may ruin it for us all

Kevin Paterson says that it&#39s time to regulate the booming buy-to-let market or face the real prospect of watching it go bust, with serious consequences for the economy as a whole. The combination of lower interest rates, ever-decreasing annuity rates and a more volatile stockmarket has caused investors to look for alternative sources of income. […]

CBI “encouraged” by Brown&#39s priorities for spending

CBI director-general Digby Jones this week suggested business would be “encouraged” by Chancellor Gordon Brown&#39s plans for public spending. But he warned that the new money does not in itself answer the need for reform, saying: “The Chancellor has rightly invested in the future productivity of British business with funds for education and transport. But […]

Snowden set to resign from Verso

Colin Snowden, managing director of self-cert specialist Verso, is resigning at the end of the year.Snowden&#39s departure follows news of the merger between Britannia subsidiaries Verso and Platform Home Loans. Verso will continue to trade but will be scaled down until it eventually shuts its doors to new business in the first quarter of 2003. […]

Newsletter

News and expert analysis straight to your inbox

Sign up