One of the dirtiest secrets in Bermuda real estate is the practice of ?fronting?, by which individuals, companies and trusts buy properties on behalf of non-Bermudians.

The practice hit the headlines last year when a non-Bermudian was charged with the practice. But the case collapsed when Puisne Judge Ian Kawaley ruled that no law had been broken.

Government has now promised legislation by the end of the year to plug the loophole. That is welcome and long overdue. This practice is clearly wrong in terms of natural justice, even if the law makes it possible.

It is conceivable that companies or charitable foundations could use the policy to buy homes. In other circumstances, non-Bermudian might be able to buy homes which are available only to Bermudians through a Bermudian ?front? person. The non-Bermudians might then live in the house, or carry out a massive renovation that would make the house eligible to be owned by non-Bermudians, at which point it the sale would be legitimised.

Finally, if a Bermuda trust with a non-Bermudian beneficiary buys a home, the owner can avoid paying a licence fee, which can cost hundreds of thousands of dollars.

So blocking the loophole should be done. It is not entirely clear why it should take until the end of the year to do so, although the complexities of trust laws no doubt make it difficult.

But it is striking that the other half of the policy announced on Tuesday, has been done quickly, with no warning or consultation and little thought for its potential consequences.

On Tuesday at 5 p.m., Government blocked, for the next five years, the sale of any properties now owned by Bermudians to non-Bermudians.

Home Affairs Minister Randy Horton said the scale and social cost of fronting was ?immeasurable?. That means it can?t be measured and therefore it could have happened once, twice, ten times or a thousand times. Even though it can?t be measured, Mr. Horton went on to announce that it was ?intolerable?, had resulted in the loss of ?enormous? revenue to the Government and must be stopped.

Mr. Horton has now tried to do just that, but has used the proverbial sledgehammer to crack a nut. Barring the sale of homes by Bermudians to non-Bermudians may stop the practice of fronting, although it does nothing to stop those people who would have tried to evade the law by finding a sham Bermudian owner to act for them.

But it also punishes all the people who have scrupulously obeyed the law and paid their taxes in full.

It is a matter of simple economics that properties currently owned by Bermudians which were previously eligible for sale to non-Bermudians have been devalued because demand has been cut. At the same time, it has created a windfall for non-Bermudian owners because house prices must now rise as a result of reduced supply.

For many, this may seem to be a problem only affecting the rich, and it is unlikely a single mother of two in a one-bedroom apartment will have much sympathy for them. And for those who take the xenophobic and simplistic view that the housing crisis has been caused by ?foreigners?, this will no doubt seem to be good policy.

It?s not, because the causes of the housing crisis are complex and multi-faceted, and this approach may do nothing to fix it.

Worse, sudden changes of policy without consultation are unsettling and damage Bermuda?s reputation for stability.

If the intent of the change was to block fronting, it would have been better to ensure that all trusts had a clause stating that a trust with non-Bermudian beneficiaries cannot buy property which would otherwise be available only to Bermudians.

Similar amendments to the by-laws or exempted companies and foundations from owning land or property could be put in place.

If the intent of the policy is to reduce the number of properties available to non-Bermudians, then other approaches should have been considered as well. One would be to freeze or greatly reduce the number of new condominiums available to non-Bermudians. This might be self-defeating, because it can be argued that resident non-Bermudians who buy and live in condos are freeing up space on the rental market. A second approach would be to gradually raise the ARV level on homes over a period of time.

Government, having acted in haste, should now reconsider its policy, not at leisure, but quickly.