MichaelDes
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It tried to do this in 1998 after the 1st Bacon report, when it removed mortgage interest relief on rental income for investors. The aim of this was to reduce competition from investors in the first-time-buyers market. The result was an exodus from the private rental market, followed by a shortage of rental acommodation and higher rents. The government was forced into a u-turn on this measure.
Experience shows attempts by government to control the price of housing through the tax system either don't work or have drastic unforeseen consequences.
Do you think the government gave enough time for Bacon 2 to settle or did it have its arm heavily twisted by certain interest groups such as CIF? It was a crisis acknowledged by the government back then in 1999 that instigated these reports. Little did they know how worse it would get?
Maybe the intervention needed certain tweaking rather than a total u-turn. Surely intervention could have worked. Since its reversal, haven't rents gone up considerably although not totally in synch with house price growth. HPG has gone through the stratosphere and way beyond and in essence will not served the economy well in the long term. I support free market to an extent but mechanisms are necesscary to control reckless abandon.