As I wrote in a previous article a coordinated property crash could sort out the problems we have for first time buyers, sellers in negative equity and estate agents.

But there seems to be no way out of this mess without SOMEONE take the pain for the years of reckless lending and an over inflated housing market.

The question is who can take the knock for all this debt and get the housing market moving again?

And another problem which has been pointed out to me by bloggers on The Economic Voice and is that writing off large amounts of debt i.e. writing off negative equity can have detrimental consequences on the economy and the currency.

But maybe all is not lost.

Here are some revised points I propose could benefit everyone:-

1. The National Average Wage is worked out excluding anyone in the highest tax band to give a truer figure from the equation.

2. The average house price is worked out at two and a half times a single income with a 10% deposit.

3. Banks cap lending at two and a half times a single income with a 10% deposit.

4. Estate agents and valuers reprice property accordingly and face losing their licenses if they do not.

5. Once the new average wage and average house price is worked out then the banks write of ALL negative equity above the new national house price.

6. Interest rates are increased to soak up any inflationary pressures this might place on the economy.

7. To prevent a new bubble forming profits on property are caped and linked to inflation which is controlled by serious and vigorous interest rate increases. Any profit over inflation must be taxed at 90%. Or Land Value Tax should be introduced.

8. The Bank Of England prints money to cover the loses of the lenders from the negative equity write offs.

9. The lenders are then caped on the amount they can lend with their new capital position and a monitored very closely by either the BOE the FSA or another public body.

10. All of the above would be backed by legislation in particular the attention would be focused on taming the banks and the public in how much they could spend to keep inflation down and holding the currency up.

Now I have tried to outline a way to crash the housing market so that no one goes away unhurt and with negative minimal impact on the economy and currency.

It is a far from perfect and simplistic idea but its food for thought.

I believe that if Britain sorts out its housing problem then the rest of the economy has a lead weight lifted off it the only trouble is with all the new money floating around how do you prevent a devaluation in the currency and high inflation?……interest rates.

I am sure savers will enjoy the benefits of that as well.

A similar scheme could be incorporated for the commercial property market which is also strangling British business due to the excessive rents from struggling commercial property developers and those rents should also be caped.

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