LETTER:Responsibility for home loans

From Mr Neville Ireland

Sir: As an independent surveyor/valuer in the residential sector, I find it is commonly agreed among those of us "at the sharp end" that the peak in prices of late 1988 was entirely the result of Nigel Lawson's budget (which deferred the loss of double tax relief from April until August).

As the market was already overheated, due to the introduction on a large scale of foreign money being poured into the banks and fringe lenders, we saw prospective purchasers believing that this was their last opportunity to get a foot on the ladder in an escalating market. The knock-on effect went right the way up the price ranges.

The Government cannot escape responsibility for the peak of August 1988 ("Major caught in storm over homeowners", 2 June). At the same time, and over a longer period, it also steadfastly refused to curb the excesses of the lenders, who were falling over themselves to get people to borrow more and more. It could, for example, have limited the amount of home loans to 90 or 95 per cent of the purchase price as had been done with the building societies in the past.

Yours faithfully,

NEVILLE IRELAND

Letchworth, Hertfordshire

3 June