The Royal Institute of Chartered Surveyors (RICS) announced that sales were at their lowest level since its monthly survey began in 1978. The slump in the UK property market continued in August, with some estate agents selling only one property per week during the last three months.

Mortgage shortage

A shortage of mortgages is the critical factor which is preventing the housing market from recovering. RICS warned that the Government’s stamp duty freeze would not be enough to kick start house sales.

The past 12 months have seen an unprecedented collapse in property sales and prices since the housing market, both in the UK and the US, was hit by the credit crunch. Fallout from the crisis has affected global property markets, with house prices falling sharply in many other countries.

On a brighter note, 10 of the largest mortgage lenders in the UK have cut the cost of their two or three year fixed rate deals in the past two weeks.

The Nationwide (BBC News) predicts that 2.5 million homeowners could be pushed into negative equity, due to a 25% fall in house prices. Indeed, there may be no recovery in the housing market until 2010.

The US Treasury’s bailout of housing finance providers, Fannie Mae and Freddie Mac, should go at least some way in helping to restore confidence in financial markets.

In the UK, two options being considered by the Treasury are to provide a guarantee for mortgages packaged as bonds for sale to investors, or to extend an existing Bank of England liquidity scheme so that it could help banks to refinance new mortgages. Both options are designed to boost the confidence of global investors that the money they lend to UK banks for the provision of mortgages would be safe.

The National Housing Federation (NHF) has just announced that by the end of next year (2009) 5.7 million UK households will be spending at least 10% of their income on energy bills – a staggering increase of 100% since 2005.

The five million people who pay for their energy through prepayment schemes are charged higher tariffs. By 2010 they will be paying £65 more than people billed quarterly, according to the NHF.

Ruth Davison of the NHF said that a “full scale national energy crisis” was looming.

The TUC has warned the Government it needs to take urgent action to help people cope with the economic downturn. Speaking ahead of the TUC Conference in Brighton next week, General Secretary Brendan Barber said starkly that millions of households were already in recession.

Mr Barber stated that the Unions would continue to pressure for a windfall tax on energy companies. He also criticised the Government over public sector pay and warned of further industrial action before the end of the year.

Mr Barber highlighted the “yawning chasm” between the super rich and the rest of society. He blamed “greedy” bankers and high global demand for oil for the credit crunch.

A stamp duty freeze was hinted at last month – leading to claims that the housing market had been slowed further by the rumor. It has just been announce by the Treasury that the current £125,000 threshold will be raised to £175,000 for 12 months in an attempt to boost the market.

Around half of the 90,000 homes bought each month cost £175,000, or less. A house buyer purchasing a property at the average UK price of £165,000 will now save £1,650 (1% stamp duty) under the scheme, which could cost the Treasury as much as £600 million over the next year.

The government has not indicated how it will cover the massive tax revenue shortfall resulting from the stamp duty freeze. Chancellor Alistair Darling said that he would give more details in his Autumn Pre-Budget Report. He also stated that the Government was considering ways of increasing access to mortgage finance.

Other housing moves announced by the government, exclusively for properties in England, include:

• “Free” five year loans of up to 30% of a property’s value for first time buyers

• Extension of powers for councils and housing associations to pay off the debts of homeowners who can no longer afford mortgage repayments – and charge them rent instead.

• Shortening the period before Income Support for Mortgage Interest is paid from 39 weeks to 13 weeks.

• Bringing forward spending from future years to encourage more social housing to be built

Even in a depressed housing market it is still possible to sell your home. The following top tips will boost your prospects:

1) Due to the “credit crunch” it has become harder for property buyers to find mortgages. The knock on effect is that it is more difficult for vendors to sell property. For anyone who has managed to secure a mortgage loan offer, it is a buyer’s market. It is important to price your property correctly. The best way to achieve this is to look around at all the estate agents working in your area, examine the property in their windows and establish which agents are successfully selling houses like yours. Also look at the property advertisements in local newspapers.

2) Get at least three valuations on your property. To ensure a sale, consider undercutting the asking prices of similar properties in your area.

3) Look into selling your house at auction. This is an increasingly popular way of selling properties. Many television property programmes now feature Real Estate auctions.

4) The next thing to sort out after the price is the presentation. Because you need to impress your buyers, you are going to have to put in the work to ensure that your house has kerb-appeal, and is immaculately presented.

5) The approach to a house is all important. If you have a drive or parking area to the front of the house, make sure that it is clean and clutter free. Tidy up the garden, front and back. Make sure that the windows are clean. On the inside, it is mainly the condition and appearance of the kitchen and bathroom that will determine how fast you sell your home. The number of useable bedrooms is also important. “Depersonalise” is the operative word. A fresh neutral décor works best. The kitchen needs to be spotlessly clean, with cutlery, utensils and crockery neatly stored away. The same holds true in bathrooms. If you have a box room, empty it out as much as possible to maximise space. If you need inspiration watch the “House Doctor” or similar TV house makeover programs.

6) If your house is still not selling after its makeover, then you may have to consider dropping the asking price – but talk to your estate agent for feedback first. Ask them for ideas and suggestions for what you could do next – but remember, it is in their best interests to keep the price as high as possible because then they make more commission.

7) If you do decide to cut the price of your house the best thing to do is to take it off the market temporarily. Leave it off the market for a month or so, and then re-advertise it at the new price with a different agent. This should attract a set of fresh buyers who think that your property is new to the market.

The flood of negative news from the UK property market continues leading analysts to ask – is this now a house price crash? House prices are falling at their fastest rate for nearly 18 years as potential buyers stay away from the market. Figures from the Nationwide just released underline the scale of the problem now facing the market. Average property prices have fallen across the UK by 10.5 per cent over the last year, and worse still the pace of decline is accelerating according to Nationwide Building Society. While prices fell by 1.5% in July, this has accelerated to 1.9 per cent in August.

House prices have now fallen for 10 months in a row. On a brighter note, while there was still a great deal of uncertainty, the Bank of England’s forecasts for growth and inflation have been widely interpreted as opening the door to rate cuts.

Market rates are beginning to respond to this, and as a result mortgage rates, particularly fixed-rate deals, have started come down. But the competition is limited to borrowers with large deposits, with many lenders now offering their best deals only to people borrowing less than 60% of their home’s value.

UK House Price Affordability Index

UK house prices remain near extreme levels of unaffordability that requires a substantial fall in UK house prices until prices reach the levels of even 2002. The current trend clearly indicates a weak UK housing market for several years. During a recessionary period that the UK is expected to enter towards the end of 2008, real disposable incomes tend to decline. This suggests that despite falling house prices, the affordability index may not see any significant improvement until 2010.

Conclusion

The UK Housing market is on track for a significant drop in prices until at least 2010.

Dealing with Estate Agents

It is very important to bear in mind when dealing with an estate agent that their primary client is the seller and not the buyer. If you live in England, Wales and Northern Ireland, here are some things that you should know:

• Find an agent that belongs to an Ombudsman’s scheme. The Ombudsman can award compensation and publishes a list of members on its website. Under the government’s Consumer Act, all estate agents have to belong to an industry body with an ombudsman scheme attached

• Be aware of the estate agent’s legal obligations

• If a buyer or seller believes that an agent has failed to meet its obligations they should complain to their local trading standards department

• Complaints about agents should be made to your local authority’s trading standards office

• If the agent cannot resolve a problem and they is signed up to the OEA code of practice, you can take your complaint to the Ombudsman

• Do not use the same legal adviser as the seller

• When an offer is made for a property, the estate agent must pass it to the seller promptly and in writing

• If you are the buyer, the estate agent does not have to give you details of other offers they have received for the property that you are after. Badly-handled offers are one of the top complaints dealt with by the Ombudsman for Estate Agents

• According to the Office of Fair Trading (OFT), an agent must not invent a bid or claim to have a cash offer, or first-time buyer, unless this is true. Nor can they state that they have a potential buyer unless that is true. A seller should demand to see the evidence if they have suspicions

• After your offer has been accepted, you cannot force an estate agent, or seller, to take the property off the market, or stop them advertising. You may fear being gazumped, but the agent is working to get the best price for the seller, and not the buyer. Some agents will offer to take a property off the market out of goodwill – particularly if your offer is close to the asking price and you are not involved in a chain

• In England, Wales and Northern Ireland, an estate agent can ask for a holding deposit once an offer has been put in, providing that they are covered by adequate insurance. All money must be held in a separate client bank or building society account, or accounts, as set out in the Estate Agents (Accounts) Regulations

• A common complaint handled by the Ombudsman for Estate Agents are “inaccurate sales particulars”. It is actually an offence for an estate agent to make statements about a property that are false, or misleading

• Estate agents are forbidden from presenting a seller with hidden extra charges. They must state either the exact amount you will be charged, or when this is not possible, provide details about how the costs will be worked out, or provide an accurate estimate. It is important to read their contract of services carefully before signing. For example, if you opt for single estate agent selling rights, and then find a buyer yourself without the help of the agent, you will still have to pay the agent

• Estate agents cannot discriminate against a buyer because they do not want to take advantage of the agent’s financial advice services. Agents must treat all buyers “fairly”, under the terms of the Estate Agents Act 1979

The OFT has a free booklet called “Using an estate agent”, which is available from its website.

Contact addresses

The Ombudsman for Estate Agents Scheme: 01722 333306

The National Association of Estate Agents (NAEA): 01926 496800

Criminals are becoming increasingly high-tec. They are constantly finding new ways to crack the security systems protecting our personal information – such as the credit and debit card details we give when we are shopping – and even the passwords we use at the bank.

Here are some steps that you can take to reduce the risk of identity fraud:

1) Never throw away anything that could be used to steal your identity. Do not stop at the obvious, such as bank and credit card statements, old driving licenses and passports. The list includes pretty much anything with your name, address and other personal details. Always shred sensitive documents before you throw them out.

2) Keep confidential information, such as PINs, bank account details and passwords secret. Friends and family do not need to know. Strangers cold-calling or e-mailing will only ask for such details if they are fraudsters.

3) Check your credit card and bank statements carefully. An unidentifiable transaction is often the first sign of fraud.

4) Obtain regular copies of your credit report – the personal history of the loans, cards, mortgages and other credit you have taken out. If you discover anything unusual, such as an application for a credit card that you did not make, contact the lender and let them know. You should also contact the credit reference agencies that hold your credit report (Experian and Equifax). Your credit report changes as your circumstances change, so you need to look at it regularly to be sure that it remains accurate and up to date.

5) Do not carry around important documents, such as your passport, NI and medical cards needlessly. Lock them up securely at home.

6) Report thefts of credit cards, etc immediately to the police and any other relevant organisations, such as your bank or credit card issuer.

7) Get mail forwarded when you move and notify the Post Office immediately if any of your mail is going missing – criminals may be intercepting it.

Register to vote at your current address – it makes it more difficult for fraudsters to impersonate you.

The Retail Price Index is rising. A key way to stay ahead of inflation is by maximizing the return on your cash.

Here are a few tips:

Tip 1: Change your current account

Make sure you are earning the best rate of interest on the cash kept in your current account. There is a wide variation in rates and it is well worth shopping around.

Tip 2: Ensure savings are getting the highest rate

It is well worth checking to see if your current savings rate is still competitive. If you need regular access to your savings, however you will have to be willing to accept a lower rate of interest – there are, however, some very good deals out there, so it is worth shopping around.

Tip 3: Take advantage of cash Isas

Cash individual savings accounts (Isa) work like any other standard deposit account, except that the interest is tax-free. It is possible to invest up to £3,600 a year in a cash Isa. If you have money in an Isa that is no longer paying a competitive rate of interest, you can transfer it to another account without losing the tax break.

Tip 4: Offset savings

More than likely, you are paying a higher rate of interest on your mortgage than you are getting on your savings. This means that an offset mortgage may be worth considering, particularly if you are a higher-rate taxpayer.

Offset mortgages work by setting savings against borrowing. In effect, you do not get paid interest on your savings, but in return monthly interest payments on your mortgage loan are reduced.

For example, if you had a £100,000 mortgage and £30,000 in savings, you would only pay interest on £70,000 of the loan. Your monthly payments, however, would be based on the full £100,000 loan meaning you overpay on your mortgage each month, and clear your debt more quickly. And because no interest is earned on savings, there is no income tax to pay. This is why offsetting can be particularly beneficial for those in the top tax band.

It should be noted, however, that interest rates on offset mortgages are often slightly higher than those on standard home loans, so offsetting may not be the best option – it will depend on the amount you have in savings.

The main offset providers include Newcastle and Yorkshire building societies, Woolwich, Intelligent Finance, and First Direct.

Tip 5: Purchase NS&I index-linked savings certificates

You are guaranteed to stay ahead of rises in inflation by investing in index-linked savings certificates available from National Savings & Investments (NS&I). Three and five-year plans are available that are set at 1% above the retail price index (RPI), with minimum purchases of £100 and maximum purchases of £15,000 per issue.

The three-year certificate, 18th Issue, is paying 1 percentage point above RPI, currently 5.6%. This equates to a savings rate of 7% for a basic-rate taxpayer, and 9.3% for a taxpayer in the top band.

Tip 6: Review your interest

If you have a credit card, or a loan, and the interest that you are being charged is higher than what you are earning on your savings, focus on repaying your debts first rather than committing more cash to savings.

You should also ensure that you are not paying more credit card interest than necessary. There are some great interest-free balance transfer credit card deals that you may qualify for if you have a good credit rating.

However, if you do choose to put most of your money towards debt repayment, remember to keep some cash aside for unforeseen eventualities.

Tip 7: Try a little gambling

For around £100 you could pick up a NS&I Premium Bond. There are two £1m jackpots every month along with many smaller cash prizes. But, unlike the National Lottery you get to keep your stake money.