The Royal Institution of Chartered Surveyors (Rics) has told the Bank of England that it should use its powers to limit house price increases to 5% a year to “take the froth out” of price booms. Rics believes that a 5% annual rise should help put in place caps on how much people could borrow relative to their incomes or the value of the property. Joshua Miller, senior economist at Rics, said that it was important to stop any debt-fuelled house price advance. “This cap would send a clear and simple statement to the public and the banking sector, managing expectations as to how much future house prices are going to rise. We believe firmly anchored house price expectations would limit excessive risk taking and, as a result, limit an unsustainable rise in debt,”
he said. However, Rics is not suggesting that sellers should face a limit on how much they could charge for their homes.Activity in the UK housing market has picked up in recent months which have caused debates about the future of the UK housing market and the potential for government schemes to create an artificial price bubble. Simon Rubinsohn, chief economist at Rics, said Rics members, including estate agents, wanted a stable market, rather than a volatile one, adding that he did not believe there was a house price bubble at present. The Bank’s governor, Mark Carney, told MPs on Thursday that the Bank of England was being vigilant on house prices and that parts of the country had not seen any recovery in the housing market. Earlier this week, the Council of Mortgage Lenders (CML) confirmed that the UK was not in a house price boom.The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.Setfords Solicitors are a national full service law firm, with residential property solicitors in Walton on Thames and across the country.