Wednesday, April 05, 2006

Housing market

The government is suggesting some policies to take the heat out of the housing market the three main issues seem to be.

1) Enforcing the law regarding tax on investment houses (presumably they will have a look into some trusts and people dodging the law)

Surely enforcing the law is a no brainier

2) Preventing people from offsetting losses on housing against other income

Why did we ever allow this? It is a bit like letting me offset losses on the purchase of a car or TV against my income. That would effectively result in no one ever paying tax.

3) Reducing the amount people can borrow against a house

I don't think I support this. Banks are taking a risk, but that is what they are paid to do. And borrowers might be using that money for all sorts of purposes restricting them to an arbitrary amount is likely to be inefficient.


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