Proposals contained in the Insolvency Bill aimed at helping struggling borrowers could accelerate the pace at which house prices are falling according Standard and Poors.
The ratings agency's comment on the recently published draft bill says the proposals are necessary to tackle the mortgage debt crisis.
The proposals include reducing the time period to discharge a bankruptcy order from 12 to 3 years.
It also provides for non-judicial arrangements between banks and borrowers to reduce or write off their debts in certain circumstances.
Standard & Poors says the legislation if passed could increase the number of repossessions and accelerate the rate at which distressed properties are put up for resale.
"These alternative outcomes and the insolvency arrangements could add supply to the housing market, lowering house prices more quickly to the clearing level or trough by late 2013," it says.
