Realtors have hit out at Government's crackdown on property sales to foreigners which they say will only hurt Bermudians.

And one estate agent has questioned the need to tackle what he believes is a non-existent problem.

This week Government changed housing policy so that non-Bermudians can still buy homes with annual rental values above $126,000 ? but only from non-Bermudians.

Condominiums can also be bought by non-Bermudians but only from other non-Bermudians.

Buddy Rego, president of Rego Realtors, said the new policy would mean foreigners would have a bigger market to sell their homes while Bermudians could only entertain offers from their compatriots.

Labelling the policy inequitable he said: "It is so incredibly blatant that no one, including realtors and the public, can make any rhyme or reason of it."

He said his firm sold 12 homes last year with ARVs above $126,000 and only two went to non-Bermudians.

Of the ten top-end homes sold to Bermudians four were sold by foreigners.

Mr. Rego said: "What is the problem? That end of the market is becoming increasingly Bermudian.

"Bermudian land owners are up in arms. My phone has been ringing since 7.30 this morning."

Government placed the five-year ban on Bermudians selling top end homes to foreigners on Tuesday, saying an $8 million decline in annual licence fee revenue indicated trusts were being used to front such sales to avoid the 22 percent sales tax.

But Mr. Rego said the drop in revenue reflected the shift in the market and he also questioned Government's claim that fake trusts were often being used to front sales of cheaper housing to foreigners.

He said: "I don't believe it is a problem and this is not what this policy is about."

Government has pledged to address the fake trust problem with hard-hitting legislation later this year.

But Mr. Rego doubted people would pay huge amounts for a house and sign it over to someone else.

Cris Valdes Dapena, Director of The Property Group, said the new regulations had very, very serious negative consequences and might not stand as lawyers were gearing up to challenge it.

Ms Valdez Dapena said to her knowledge no realtor had been consulted about the drastic changes and said the policy would do nothing to stop the use of fronting trusts.

Instead, she said it would more likely encourage them as non-Bermudians tried harder to get property which was legally closed off to them.

She agreed that Bermudians would see their property prices drop dramatically while non-Bermudian neighbours would be unaffected.

However Chief Immigration Officer Martin Brewer denied foreigners would not want to pay for a house and sign it over to someone else. He said there were sophisticated ways of paying the money and retaining control.

He said: "There was a case in 1976 where a Bermudian was fronting for a company and the Bermudian reneged on the deal and sold the property.

"The company took the Bermudian to court and got its money back even though it was an illegal deal."

Sometimes individual Bermudians rather than trusts fronted for foreigners said Dr. Brewer.

Yesterday legal firms were scrambling to get copies of the new policy which came into effect on Tuesday, but Dr. Brewer said copies of the policy would not be ready until today as he was rewording it.

He said: "People found it somewhat confusing in the way it was written."

Dr. Brewer said there had been a few phone calls asking for clarification but no complaints or raised voices.

Asked if it would put Bermudian sellers at a disadvantage Dr. Brewer agreed but said the policy would help future generations by preserving property which locals could buy.

Opposition MP Trevor Moniz slammed Government for waiting more than five years to tackle the problem of false trusts after he raised the issue in the House of Assembly in November 1999.

He was told by then Home Affairs Minister Paula Cox that Government was aware of the problem and was talking legal advice.

But he said that weak message and a lack of action for years was a green light to unscrupulous lawyers who knew they would not suffer and piled in.

He said: "I warned them this was a big problem and seven years later it's a huge problem.

"I knew because I was on the Bar Council and I knew what people were doing."

Government has said laws tackling false trusts could be enacted by the end of the year.

Last year in a failed fake trust prosecution Police alleged that top tennis player Norberto Herrero paid former Mayor of Hamilton William Boyle $100,000 to "front" for him.

Police said Mr. Herrero, Mr. Boyle, ASK lawyer Edward Scott Swainson, and Bruce and Margaret Hern of Sterling Management, who are trustees of Labrador Trust, were involved in a conspiracy to defraud the Government of $660,000 sales tax that would have been paid if the house had been sold to a non-Bermudian.