ANOTHER BODY BLOW FOR HIPS

"Although a bank was a small shareholder, our funding came mainly from private individuals," he says.

"The prospect of going another 18 months in a lousy housing market, with the Tories probably coming in at the end of that period and scrapping HIPs, has produced this decision."

When Habitus, another firm in the HIPs sector, failed a few months ago, some outstanding debts for HIPs that it was owed by homeowners went to debt collection agencies. There have been reports of homeowners who failed to sell facing considerable pressure later to stump up the cash.

Trevor Kent, a Gerrards Cross, Bucks-based estate agent, has consistently opposed HIPs.

"I fear there has been some mis-selling of HIPs, as I warned, and some people may have been told HIPs were provided on a 'No sale, no fee' basis," he says.

"Once the housing market turned, any sort of upfront payment was clearly going to be a problem for many homeowners trying to sell. When it turned out to be payment for something of no use to man or beast, as HIPs have evidently become, the whole thing becomes a nonsense."

However Smith maintains some sort of reform of the house buying process remains likely - possibly something along the lines of a scheme coming into effect in Scotland from December 1, which will provide a buyer's pack with a survey and vendor's warranty statements.

"There is more to interest a buyer here than the bundle of searches you currently find in the HIP," Smith says.

"It will cost about £750 per property - whereas some HIPs sell for as little as £199."

Smith calls for some agreement between Government and the Royal Institution of Chartered Surveyors (RICS) to point up a new strategy - and a clearer statement of intent from the Tories about what they will do if and when they take over.

Meanwhile, the Government also reaffirmed its faith in HIPs this week by announcing plans to increase the amount of information in HIPs provided for buyers.

A new Property Information Questionnaire (PIQ) included within the HIP would cover building works carried out on the property, details of parking arrangements, council tax banding and information on utilities.

Sellers would be able to fill in the PIQ without professional help - and following a consultation period to the end of September, it could become a mandatory part of HIPs from January 1, 2009.

"Having the right information about a property at the beginning of the home-buying process is essential if we are to reduce delays and cut down on wasted costs for both buyers and sellers," Housing Minister Caroline Flint says.

Consumer group Which? welcomed the Government's move, and says the proposed seller's questionnaire could be a "first step" to improving HIPs.

Although HIPS were extended to all homes on sale from December 2007, a Parliamentary Committee in January accused former Housing Minister Yvette Cooper of losing her nerve in the introduction of HIPs - leading to confusion, delays and watered down packs.

:: BUY-TO-LET INVESTORS GO BACK INTO THE MARKET

Experienced investors are already back in the market and looking to expand their portfolios of rented properties, often by buying former local authority-owned flats in blocks where the rental prospects are well-known.

Stephen Ludlow, director of ludlowthomson.com, says successful investors taking a long-term view are undeterred by the recent market correction.

"They recognise that lower prices mean yields are creeping up, and they are usually able to raise the finance from lenders keen to lend to their existing client base, instead of dealing with new customers who may be a less reliable proposition," he says.

Interestingly, Ludlow says the best income doesn't necessarily come from the best addresses.

Top of his earnings league are three-bedroom flats in Lewisham at £140,000 each, which earn £253 per week - a yield of 9.4%. They are followed by one-bedroom flats in Wood Green, N22, costing £90,000 and earning £150 per week (8.25%); and four-bedroom flats in Peckham, SE15, at £210,000, earning £325 per week (8%).

In Catford, another scarcely fashionable corner of south London, Ludlow reckons three-bedroom flats at £190,000 earn £254 per week for a 7% yield.

"When investors look for a deal, it is essential for them to show the mortgage finance is already lined up before they make an offer. If vendors realise they are serious with ready cash, a deal is far more likely," he says.

Woolwich announced this week that it is cutting rates on buy-to-let loans, with lifetime trackers reduced by 0.40% and five-year fixes down by 0.5%. Both are available either through intermediaries or direct from the bank.

However mortgage planner HFM Columbus says a growing percentage of buy-to-let loans come from foreign banks, as UK lenders appear to "lose their bottle".

Gary Festa at HFM Columbus says that in many cases, foreign lenders are able to devise superior deals.

He says one client who was rejected by UK lenders has struck gold with Kleinwort Benson on a £1.7m deal at 1.15% over the one-week Libor rate (currently 5.1%). Monthly repayments work out at £8,854.

"The best we could find via traditional UK lenders is 1.6% over Bank base rate, and it is just not competitive", he says.

INFORMATION: HFM Columbus (01932 682 123); Woolwich (0845 607 1111); Stephen Ludlow at Ludlow Thompson (0207 480 0170).

:: HANG ON FOR THAT AUTUMN BOOST, SAYS TOP AGENT

One of Britain's most experienced estate agents believes that the "resilient" UK housing market will always bounce back - and in much faster time than the 20-year slump predicted by some doomsters.

Simon Agace, founding chairman of Winkworth, a franchise operation with 85 offices in central London, southern England, Nottinghamshire and Yorkshire, admits the price drop in the housing market is "possibly the worst we have ever experienced in recent history.

"Prices may fall a couple of per cent more in certain micro markets", he says.

"But City analysts who talk down the market with suggestions of a housing crash lasting for years do not understand the complexity of the English market.

"Granted, the new developments market, which is saturated and overvalued, is going to really struggle and it may take many years to recover. But this is the exception and not the rule," Agace says.

"It is our view there will be a small but notable spate of activity in the autumn, with increasing stock levels. This is when we will achieve a period of stabilisation and returning confidence.

Agace says his prediction assumes that politicians and the Bank of England do not make any decisions that could negatively impact the market, such as a rate hike.

Winkworth's analysis suggests asking prices have so far fallen by 7-10%, with a further 10-13% likely to be negotiated off.

It cites a two-bedroom flat in Acton, west London, which sold for £265,000 in early 2007.

When it went back on the market in April 2008, the vendor wanted a quick sale. Winkworth cut the price to £249,950 and has just agreed a sale at £225,000.

Winkworth also cites the case of an unmodernised house in Hammersmith, west London, which sold for £1,175,000 against the £1.5m achieved for a similar property a year ago.

Agace says that if the Government gets it wrong, some prices could fall as much as 30%.

"Beyond 30%, there is usually real resistance and many vendors refuse to sell, although in many areas a fall of that magnitude would only take us back to 2005."

He thinks today's market compares to the crash of the early 70s, "when we had money rationing and similar credit restrictions".

On that occasion, the London market was turned around by oil wealth and "the influx of new wealthy foreign buyers, which set the trend for the future growth of the market".

"In reality, the money hadn't disappeared on that occasion, to be lost forever in a black hole; it had just gone into hiding. As soon as the market stabilised, UK and worldwide wealth re-emerged, creating a new wave of confidence," Agace says.

He reckons something like that will happen again.

"Fundamentally, people always need to move house and those with disposable income will always want to invest in property."

Agace has some advice for those considering getting involved.

"If owners don't have to sell, it might be best they don't try - unless they want to move up the market," he says.

"So far as buyers are concerned, there are real opportunities in many places for those seeking larger three and four-bedroom family houses.

"Although you will get a bit less for your flat, you might get a house which has come off by £200,000. And these sort of prices might not be around for too long."

:: HOME-OWNERS ARE PAYING FOR BANKERS' FOLLY

Property prices are being driven down because leading lenders like Halifax and Nationwide keep raising their mortgage rates to rebuild profits, claims a new analysis of the housing market.

The Assetz House Price Watch for July, which analyses five major house price indices, says the average price of a home in June at £207,564 is just over £4,000 down on June 2007, when the figure stood at £211,939.

Stuart Law, chief executive of Assetz, a property investment company, says: "Lenders did not pass on April's interest rate cut to consumers and have continued ever since to hike their mortgage costs to increase their own margins, while transactions are low.

"This profiteering must stop to create a fairer deal for homebuyers, who are unfairly paying for the excesses and errors in investment banking over the last few years.

"Rate cuts from lenders, coupled with Bank of England Base Rate cuts and an injection of capital by one route or another from the Bank of England, would bring some liquidity and confidence to the mortgage market."

Another June market survey - this time by housing market data specialist Hometrack - says sales were achieved at 90.9% of asking price during July, against nearly 93% in May, and 95.1% a year ago.

Hometrack says the fall-off in prices is sharpest in the south-east, where the average time taken to sell a home has nearly doubled from 6.5 weeks in June 2007 to 11 weeks today.

Hometrack reckons prices have slipped by 4.4% over the past year and returned to the level of October 2006.