How do we prevent the property market mistakes of the past.

[ubiquitous]

In the article you quoted, Mr. Murphy of Threshold didn't call for the interest relief to be re-introduced for investors, but called for reform of the stamp duty laws as well as abolition of the 2% speculator tax.

The abolition of interest relief, the punitive stamp duty and the 2% speculator tax were all part of the same package, with the same motivation, ie to disincentivise landlords from investing in residential property. When Mr Murphy says that "The stamp duty increase has adversely affected supply in the private rented sector" it is hard to imagine him arguing for the interest relief ban to be maintained, as its effect on the supply of rented properties was exactly the same as that of the punitive stamp duty.

Nor can I deny that investors were making money from high rents during Bacon.However, they also made money following the abolition of Bacon,

But rents fell in 2002, and remained largely stable thereafter.

Fwiw, I have no problem with the idea of landlords making a profit, but I draw a line at the idea of what they were allowed do in 1998-2001, ie act as an effective cartel by artificially inflating rents because of government restrictions on competition in the market.

I would have been quite happy had 2002-03 rents fallen to pre-Bacon levels but unfortunately the growth in rents during the Bacon period was so pronounced that it proved impossible to reverse.

... all the while pushing the cost of new houses beyond the reach of first-time buyers.

This latter point is also highly debatable. You seem to ignore the possibility that first-time buyers themselves contributes to the spiral in house prices by using and mis-using 40-year mortgages, 100% mortgages and the like.

Some watered-down version of Bacon was necessary at some stage in the last 5 years to slow the rising cost of new houses.

Its worth noting that the exodus of investors from the property purchase market in 2006 & 2007 did not signal a bonanza for first-time buyers.

To finally get back to the point, do you still advocate the reintroduction of Bacon, as you suggested earlier? How would you propose to resolve the inflation in rents that would follow this?