Comment: The “passing to pay” bill, not a solution but a recipe for disaster in the housing market

I am astounded that the legislature is prepared to pass such a bill as it is a recipe for disaster in the now recovering housing market and totally support (for once) the banks in their objections. Perhaps I should be more cynical and wonder whether the timing is because of the forthcoming elections.

I am well aware that a lot of people were encouraged to buy land and property at the height of the land and housing boom and the banks, in part, are to blame, it was no different in the UK. How many plots of land, apartments or villas are there, sold on false promises. How much of that land will never be developed in the next ten or twenty years? How many are suffering because they have defaulted and cannot have a bank account or credit unless they discharge the debt to the bank?

Purchasing an apartment or house is a big step for many and it is unfortunate that the market crashed as it so dramatically did and that combined maybe with a loss of employment or reduction in pay does cause financial hardship and default on mortgage payments. But just being able to hand back the property is not the solution. I am sure that there are many deserving cases where the borrower should be able to hand back the property but I am sure that there are many cases where an individual has funds but realize the property is no longer worth the money or the rent they can achieve is less than the mortgage repayments and rather than honor their debt they will take advantage.

For those without the necessary financial support I do have a lot of sympathy and they should have a solution. There is one, but one the Legislature keep avoiding and that is, either personal bankruptcy or a Voluntary Arrangement with the creditors. This is the best and fairest solution to all parties. This is available in England and works very well. Those genuine cases of financial hardship can take this route and after a period come out of the bankruptcy or voluntary arrangement with a clean sheet and start again. For either of these processes the person concerned has to declare ALL of their assets, if they fail to do so even after they are discharged, they can face prosecution.

Yes the financial industry does have some responsibility and that is to make sure that their selling practices are rigorously monitored and that only those who meet the strictest of requirements are given loans. Responsibility before profit.

By Jonathan Youens, guest writer

Jonathan Youens is a Fellow of the Royal Institution of Chartered Surveyors and Chairman of LANE, Property and Construction Consultants.