The-Lefthander

Reductions to interest payments may leave the neediest struggling to cover their mortgages

Disability and housing organisations are accusing the government of potentially forcing thousands of disabled homeowners into arrears or even having their properties repossessed because of cutbacks in mortgage benefits and care packages.

The most scathing attack comes from the National Housing Federation (NHF). It says some 64,000 people with disabilities now get monthly help through the Support for Mortgage Interest (SMI) system. This is a complex calculation, paid directly every four weeks by the government to mortgage lenders on behalf of disabled borrowers, currently at the rate of 6.08%.

If the 6.08% is in excess of the interest payable on a disabled person's mortgage, the "extra" goes towards paying off the principal debt; if it is less, the borrower must make up the difference or slide into arrears.

But the method of calculating the SMI – which is also paid to people who have lost their jobs – is changing and from October the amount will be set at a level equal to the Bank of England's published monthly average mortgage interest rate, currently 3.63%. This is still well above some current mortgage interest rates but far below others, even before expected base rate rises in late 2010 or in 2011.

Ministers announced the SMI change in the June emergency budget, but campaigners have only recently realised the effect. .

Some SMI beneficiaries are first-time buyers while others are existing owners who may have recently suffered a physical or mental impairment and whose properties now require substantial modification. Potential SMI income is considered by some lenders when they decide whether to grant a loan to a disabled applicant.

It is thought that the SMI recalculation will hit about 5,000 owners with profound physical and mental disabilities who have used the payments to secure niche – and expensive – mortgages on shared ownership homes. For these properties, the mortgage covers a share of 25% to 75% and the owner pays rent to a housing association for the remaining share of the property.

"This policy will hit thousands of people with disabilities, cutting off many from the prospect of owning their own home. The fact that ministers have not carried out a comprehensive impact assessment into such a major decision is very disquieting," says NHF chief executive David Orr.

Ray Boulger of mortgage broker John Charcol says the government may be financially justified in making the change, but believes the process is being mishandled.

"The 6.08% figure existed in 2008 when typical interest rates were running at 5% so there is an argument for change given the sharp reduction in rates since that time. But by not tailoring the SMI rate to the individuals' needs, there will always be some who get too much and some too little. It's disappointing that the coalition has just changed the figure and not changed the process into one that's fairer," says Boulger.

Disability Alliance, a charity working to help disabled people out of poverty, says it is discussing the SMI change with the government. "The reality is that this is just one of a series of disadvantages that disabled people have. First, it's difficult for them to find appropriately accessible property, then it's very hard to obtain a mortgage because there may be reduced earning potential," says its policy director, Neil Coyne.

Some disabled home owners and their families are now suffering additional financial problems thanks to council cutbacks. As part of attempts to cut public spending, many authorities are reviewing their facilities grants. These are discretionary sums, often a few hundred pounds, paid to owners who must install ramps or fit stairlifts when a household member becomes disabled.

Anastasia Kelly, executive director of the Sheffield Centre for Independent Living, an advice body for the disabled and their carers, says: "There's an inconsistent response from different local authorities because there are no national guidelines on how payments are made. Now we have to help a lot of people who are finding it harder to get these grants as councils review spending,".

The proposed SMI changes will also worsen the problems of those with disabilities who rent their homes.

"Because of the high cost of housing and the difficulty in getting a mortgage, especially if the earning potential is limited through disability, the majority of disabled people rent rather than own. The lower SMI payments mean even fewer disabled will secure mortgages, so the pressure on the rented sector will rise still further," says Conrad Hodgkinson of the Accessible Property Register.

He set up the register in 2003 to publicise homes on sale that have modifications for physically impaired owners, but he says the crisis for many is in the "pretty dire" rented sector.

"There's a lack of supply of homes to rent to begin with, plus a lack of information about whether the homes are adapted for disabled residents. Now there's the severe financial problems, made worse by the SMI issue and other cutbacks," he says. "The picture is absolutely desperate for many disabled people."

• Mortgages
• Repossessions
• Disability
• Property

From an old piano factory to a Georgian mansion

You know what, it's exactly like it sounds on the Shipping Forecast

What's going for it? "Never heard of it," said the petrol station attendant. Really? Really? He had a wicked gleam in his eye. I'm sure it must get annoying to be reminded of the Shipping Forecast by every bleeder up here on holiday. But that's Cromarty's fault for sounding – and being – so blinking romantic. From the radio, I'd always imagined it to be a salty, sea-scuffed town, streets of hard stone cottages, stuck out in the waves, Highland mountains in the distance, sandy coves, seals, dolphins and legends aplenty. And you know what? It is. As for the Black Isle, what could sound more Enid Blyton? Just needs lashings of ginger beer. Though it's not really an isle, but an isthmus, its waist pinched where it joins the mainland. Stand on the top of Mount Eagle, surrounded by woods, moorland and heath with Cromarty Firth to the north, Moray and Beauly Firths to the south, and oil rigs all around, and you might as well be on a magical island. I love this place. Mild, too, for this latitude. Important, that, come January.

The case against Not one little thing. Distance? Bah! It's far away, but that sort of goes with the territory. Too quiet? Inverness and dancing till dawn are 15 minutes away. Stop moaning.

Well connected? The A9 is the high street/lifeline. Cromarty Rose, the (no joke) two-car ferry goes from Cromarty to Nigg if you can't be bothered to drive all the way round the firth. The railway north to Wick, south to Inverness (20 minutes, several a day, but infrequently bunched) and beyond, is at the base of the peninsula at Muir of Ord.

Schools Primaries: Culbokie mostly "very good", says HMIE, Newhall and Muirtown mostly "good" or "very good" and North Kessock mostly "good". Secondaries: Fortrose Academy mostly "very good".

Hang out at... Sutor Creek, Cromarty, for pizza and Sunday lunch; The Anderson at Fortrose for whisky, oysters and general cosiness; and the Black Isle Brewery.

Where to buy The small towns – Cromarty, Fortrose, Rosemarkie, Avoch – are delicious: traditional, stone cottages and town houses, crofts, etc. But even the uglier modern stuff looks fine against this magnificent landscape.

Market values Period detacheds (old manses, town houses, etc), £230,000-£400,000. Modern detacheds and bungalows, £150,000-£250,000.

Bargain of the week Lovely old white-painted, four-bed semi-detached Cromarty town house, £159,000, with Your Move.

Jane Cooper "Go to the Sutor Creek for wood-fired pizza and fantastic condensed-milk crème brûlée."

Karen Meikle and Kevin Davis "Cromarty is a quiet, peaceful town with Scottish vernacular architecture and a friendly atmosphere."

Richard Robinson "Fortrose, on the Black Isle, is a good combination of not too remote but plenty of open space. The Anderson pub is the best – a beer and whisky specialist."

• Live in Cromarty? Join the debate below

• Do you live in Clun, Shropshire? Do you have a favourite haunt or a pet hate? If so, please write, by Tuesday 7 September, to lets.move@guardian.co.uk

• Property
• Homes
• House prices

By the turn of this year, the housing market was enjoying a very fragile recovery, but in the last few months it has begun to suffer a relapse

Let us start with two propositions. First, house prices are going down. And second, that is a very good thing.

The first proposition is riskier to make but rather more straightforward – because if you want to see what a double-dip recession actually looks like, just take a look at a graph of house prices over the last few years. From around the time Northern Rock collapsed in 2007, prices went a long way south. At the tail end of 2008, after governments had contained the financial crisis and put the economy on life support, prices began to come off the floor. By the turn of this year, the housing market was enjoying a very fragile recovery, but in the last few months it has begun to suffer a relapse. That trend was confirmed by yesterday's survey from Nationwide. Crash followed by recovery followed by relapse: the housing market provides practically a textbook definition of a double dip.

Nor is there likely to be a letup in the downturn. The coming spending cuts will cost both economic growth and hundreds of thousands of jobs – not the assertion of a newspaper, but the admission of this Conservative-led government in its budget red book. It would be a brave and possibly foolhardy person who took out a stonking great home loan if they were anxious about their job.

Sure enough, the surveys show that prospective new homebuyers are not registering with estate agents, even while surveyors report a big surge in sales instructions. That formula alone is enough to suggest that house prices are heading for a fall – but throw in the fact that homebuilders have seen a slump in sales and, crucially, that banks and building societies are still loth to give first-time buyers mortgages, and all ingredients are present and correct for a fall in house prices. That may not mean a plunge, at least not yet – that would probably only happen if droves of sellers had to flog their homes because of mass layoffs, say. What we are more likely to see over the next few months is an inching down in house prices as buyers cling to the sidelines and sellers refuse to do more than trim the asking price.

Contrary to what you might read in some newspapers, falling house prices would be a blessing. The house bubble of the noughties has handed billions of pounds to the older generation from young people who have had to take on giant mortgages to buy their homes. That was unsafe both for the purchasers and for the wider economy. But runaway prices also served to reinforce the wealth gap as rich parents were able to bung their kids big deposits, while middle- and working-class children got no such leg-up. An end to that unfair, unsafe regime can only be a good thing.

• Housing
• House prices
• Property

• This week's top news stories
• Virginia Wallis answers your homebuying questions
• Table-turning is bad manners, diners say

• House prices fell by 0.9% in August, the second consecutive monthly fall following July's 0.5% decline, taking the average price of a home in the UK to £166,507, according to the Nationwide building society.

• Advertising rules being introduced today will make it harder for fee-charging debt management companies to mislead the public by advertising their services as "free".

• Barclays is to launch a range of loyalty mortgages offering current account customers reductions of up to 0.54 percentage points off tracker, fixed rate and offset mortgages.

• Do you have any feedback on any of these issues that you want to get off your chest? Email us at money.editor@guardianunlimited.co.uk

Table-turning is bad manners, diners say

Second sittings at restaurants are increasingly common, and are increasingly annoying customers who want to to enjoy a relaxed meal. Should we accept this practice, asks Rebecca Smithers

The second sitting is an increasingly common wheeze used by restaurants to make more money. You ring to reserve a table at your favourite eaterie only to be told there is no question of lingering over a brandy or two at the end of your meal – you will be unceremoniously turfed out when the next set of ravenous diners come through the door. Read the article in full here

Question of the week: "I am a first-time buyer in the process of buying a house, but hear that the market may fall further. Should I pull out?"

Our homebuying expert Virginia Wallis says: "I don't have a crystal ball so predicting the future is a bit of a problem. However, what is certain is that if you have already paid for a survey – and possibly a mortgage booking fee – you will lose that money by pulling out now …" Read the answer in full here

• Any questions? Email our panel of experts on financial concerns, consumer gripes, legal wrangles, debt worries and career-related problems at money.editor@guardianunlimited.co.uk

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• House prices
• Property
• Consumer affairs
• Borrowing & debt

Trace the ups and downs of UK house prices since May 2006

House prices fell by 0.9% in August, while the three-month rate of change fell from 1.2% to 0%, Nationwide's latest index shows

Poll: Is this the beginning of a new slump?

House prices fell by 0.9% in August, the second consecutive monthly fall following July's 0.5% decline, taking the average price of a home in the UK to £166,507, according to the Nationwide building society.

The decline marks the first time since February last year that house prices have fallen in two consecutive months, and analysts claim the figures are evidence of continued weakness in the housing market.

Martin Gahbauer, Nationwide's chief economist, said: "The three-month rate of change fell from 1.2% in July to 0% in August, suggesting that house prices have essentially stagnated over the summer.

"Unless house prices bounce back strongly in September the three month rate of change will turn negative next month."

The annual rate of inflation remained in positive territory at 3.9%. However, it is down quite sharply from rates of 6.6% in July and 8.7% in June, and is the lowest year-on-year rise since November.

"As more sellers have returned to the market, buyers have a greater selection of properties to choose from and more bargaining power with which to bid down asking prices," Gahbauer said.

"There is little evidence of distressed selling, however, with the Council of Mortgage Lenders' second-quarter figures showing another drop in mortgage arrears and possessions. As such, the current period of price declines is likely to remain relatively modest. Given that the price increases of the last year had gotten ahead of the recovery in the wider economy, the current correction is not an unhealthy development."

But the Nationwide figures come just days after Bank of England data showed mortgage lending falling sharply in July – the second-lowest monthly figure since the Bank's records began in 1993. Only 48,722 mortgages were approved for house purchase during July, and net lending by mutuals remained in negative territory at -£379m in July compared with -£432m in June.

Howard Archer of IHS Global Insight said: "The recent overall tone of housing market data and surveys has been consistently downbeat. We currently expect house prices to fall by 3% over the second half of the year, but there is a now a very real likelihood that the drop will be nearer 5%.

"It is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in, which will hit people's pockets and lead to serious job losses in the public sector. Consequently, a further drop of around 5% in house prices looks highly possible in 2011, and the drop could well be steeper still."

He added that much will depend on mortgage availability and the amount of houses coming on to the market as well as how well the economy holds up. "Therefore, we suspect that house prices will be at least 10% lower by the end of 2011 compared to their mid-2010 levels."

• House prices
• Property
• Housing market
• Real estate

From a listed cottage in Somerset to a villa on the French Riviera

Q The survey's been done, the price has been agreed but I'm really worried about the state of the market. We are first-time buyers. We were wondering if we should believe the troubling reports and pull out of the deal now and capitalise on a falling market by buying later on. I'm looking to buy in the south-east and the mortgage is really going to stretch us. I know you don't have a crystal ball but I would value a balanced opinion. SV

A You are right that I don't have a crystal ball so predicting the future is a bit of a problem. However, what is certain is that if you have already paid for a survey – and possibly a mortgage booking fee – you will lose that money by pulling out now. If you have exchanged contracts and so paid a deposit, you'll lose even more. And potentially, you could lose yet more money if you wait for a falling market which doesn't actually happen and end up having to pay a higher price for your home. And note the word "home". Buying somewhere to live is not about playing the property market, it's about buying somewhere to live in at a price you can afford. Once you have moved in, the value of the property is largely irrelevant until you decide to move or remortgage which should be several years down the line.

• First-time buyers
• Property
• House prices

Q I am a 66-year-old retired teacher a little confused at the difficulty I have remortgaging a property at a decent rate of interest.

I currently have two properties, one in Streatham and one in Forest Hill. The Streatham property is a four-bed Victorian house worth approximately £500,000. I have been letting it for five years and currently lease it out for £1,500 per month. £70,000 remains to be paid off on the mortgage.

The Forest Hill property (worth around £650,000) is owned by me and my sister. The mortgage has been fully paid. I also have a pension that affords me £17,000 per year.

I would like to remortgage the Streatham property to raise an additional £130,000. As it is let out I presume it would be a buy-to-let remortgage, hopefully one that takes into account the rental income I achieve for the property.

However I am finding it difficult to locate a lender willing to lend to me due to a combination of my age, my income (£17,000 pension plus £18,000 rental income). I have also been informed that it would be easier to remortgage a property that was not being leased out such as my Forest Hill property. However, I have also been told that this is not possible as it is jointly owed with my sister who is resident in Australia. ME

A Your age is a big factor in the difficulty you are having in finding a willing lender. Of all the buy-to-let mortgage lenders listed by Moneyfacts, the majority put a maximum age – at the end of the mortgage term – of 65, 70 or 75. However, several are prepared to be flexible about how old you are when the mortgage comes to an end and one, the Mortgage Works, puts the maximum age at 90 meaning that you could take out a 24-year-term mortgage. This lender, in common with the majority of buy-to-let lenders also takes only rental income into account when considering mortgage applications.

Raising a mortgage on a property which is not generating an income – such as your own home or the Forest Hill property – would mean taking your pension income into account and it's unlikely that you would be able to raise a mortgage of £130,000 on your current income. By contrast, with a buy-to-let mortgage, it's the rental income that is considered and it usually needs to cover the mortgage payments by 125%. With a £200,000 interest-only buy-to-let mortgage charging a typical interest rate of 5%, the monthly mortgage repayment would be £835. Your rental income of £1,500 a month covers the mortgage by well more than 125%. The fact that you want to borrow only 40% of the value of the property should also work in your favour.

• Remortgaging
• Mortgages
• Property

Bank of England report shows mortgage lending at second-lowest level since records began

Mortgage lending fell sharply in July as activity in the housing market remained subdued, according to Bank of England figures released today.

Net lending totalled £86m for the month, down from June's £518m and the second-lowest monthly lending figure since the Bank's records began in 1993, although there have been two months when net lending was negative.

The number of mortgages approved for house purchases edged ahead slightly during the month, rising to 48,722 from 48,562, well down on the levels of more than 100,000 a month seen during the housing boom. The figure was also down on the high of slightly more than 59,000 in November.

Meanwhile, net lending by mutuals remained in negative territory at -£379m in July compared with -£432m in June, according to the Building Societies Association (BSA). Adrian Coles, director-general of the BSA, said: "There remain significant challenges such as heightened uncertainty about job prospects and household incomes, potentially limiting future demand. This could make it difficult to sustain the growth in activity."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Although the Bank of England somewhat surprisingly reported that mortgage approvals edged up in July, the fact remains that they were still at a very low level and point to ongoing muted housing market activity. Housing market data and survey evidence has been consistently downbeat recently and this is no exception.

"Consequently, we continue to suspect that house prices will fall back over the latter months of 2010 and then very likely soften further in 2011." Archer expects house prices to fall by around 3% during the second half of this year, followed by a drop of around 5% in 2011.

There was a slight increase in the number of people remortgaging during July, the Bank of England said, with approvals for those switching to a new deal reaching 26,951, slightly up on the previous six-month average, but there was a small dip in those unlocking equity from their home or taking up a buy-to-let mortgage.

Unsecured borrowing also remained subdued during July, with net lending rising by £173m. Within the total, credit card borrowing rose by £213m, but lending through loans and overdrafts contracted by £41m.

The BSA also announced that, excluding interest added to accounts, £1.3bn was withdrawn from savings accounts at mutuals in July, compared with £0.3bn in June.

Coles said: "The withdrawals may indicate the difficult economic conditions that households currently face. In addition, these withdrawals could have been intensified by competitive rates from National Savings & Investments, which subsequently withdrew products in the middle of July in the wake of considerable inflows."

• Mortgages
• Property
• Borrowing & debt
• Banks and building societies
• Mortgage lending figures
• Real estate
• Housing market
• Bank of England

Bank follows Santander, Co-op/Britannia and Halifax in offering reduced interest rates to current account holders

Barclays is to launch a range of loyalty mortgages offering current account customers reductions of up to 0.54 percentage points off tracker, fixed rate and offset mortgages. From tomorrow, customers holding any Barclays current account, including the Premier, Additions and Graduate accounts, will be eligible for the special rates.

Deals include a two-year fixed-rate mortgage at 2.95% for up to 70% loan-to-value (LTV) – 0.54 percentage points below the standard offer For mortgages of up to 80% LTV, the Barclays loyalty rate is 4.19% – a discount of 0.19 percentage points.

The bank claims its customers will save £922 in the first two years of their mortgage based on an average mortgage advance of £135,000. For larger mortgages, for example a £500,000 advance, the savings could top £3,400. To qualify, mortgage applicants need to have an existing Barclays current account, with a minimum of £800 credited in each of the last three months, at the time they apply for the loan.

Andy Gray, head of mortgages for Barclays, called the new range a reward from Barclays to its customers. "These loyalty rates supplement the competitive mortgage deals available to new and existing customers from our standard range," he said. "They also build on the drop-lock facility we launched last month which gives new tracker and offset customers the flexibility of a low tracker rate now, and the option to switch to a fixed rate-in the future when they need greater security, without incurring an early repayment charge."

David Hollingworth of fee-free mortgage broker London & Country Mortgages said: "Loyalty deals certainly seems to be a growing trend and as the Barclays options only require £800 per month to be credited to the current account when some others want at least £1,000 to qualify, it looks pretty good."

Santander's loyalty mortgages include a two-year fixed-rate 70% LTV product with a rate of 3.09%, but it requires a £495 fee and the current account must have been held for six months and a minimum of £1,000 credited per month.

The Co-op/Britannia has a tracker deal, available only to those that already hold a current account, at 1.99% above base rate for life, at 75% LTV with no fee. The account must have been held for at least two months, with a salary paid directly into the account.

Halifax offers a range of different rates for those that have a rewards account, and the deals are generally at least 0.2% below the rate for someone without an account.

"The slight difference here is that the Halifax account can be opened concurrently with the mortgage application," says Hollingworth. "In fact the Halifax website doesn't show the rates that apply without a current account, presumably working on the assumption that you will want the reward account."

• Mortgage rates
• Mortgages
• Banks and building societies
• Property
• Barclays
• Banking

With first-time buyers unable to get on the ladder, the property market is shuddering to a halt

Only a mug bets against rising house prices in Britain. This is a small island that has a rising population, tight planning controls and a tax system that favours property. Demand tends to run well ahead of supply, and that means bricks and mortar always seems a good investment.

Well, call me a mug if you like, but house prices are overpriced and have to fall. Activity is weak, with the number of new mortgage applications running at less than half their pre-recession levels. First-time buyers, according to a survey from Rightmove out today, account for only 20% of the market, about half the level needed to lubricate housing chains. A separate snapshot of the market from Hometrack says that sagging prices are more than the customary seasonal lull.

On the face of it, this seems strange. Friday's revised figures for UK growth in the second quarter showed output expanded by 1.2% – the strongest surge in nine years. Traditionally, there is a symbiotic relationship between growth and house prices; the two feed off each other. At the moment, however, this relationship has broken down and it's not hard to see why: the market has been rigged in favour of existing owner-occupiers at the expense of those trying to get on the housing ladder. Bank rate was cut from 5% to 0.5%. The Bank of England launched its quantitative easing programme, which has added £200bn to the money supply. Ministers put pressure on lenders to go easy on those in mortgage arrears.

All this was done with the best of intentions. Back in the early 1990s, Britain saw record repossessions when boom turned to bust. Given that the downturn of 2008-09 was far more severe, there were justifiable fears that a tidal wave of repossessions would tip Britain into a full-scale slump. The policy was a double success. First, repossessions were capped at about half the levels in the milder recession two decades earlier. Second, the boost to real incomes for those with variable-rate home loans meant that they could spend a bit more while at the same time paying down their debts.

But there was a downside to rigging the market in this way: it created what economists call a classic insider-outside problem. When the property bubble popped in the late 1980s, house prices fell for six years, making them affordable again for first-time buyers. This time, the scale of the policy response meant prices steadied much more quickly; they were edging up in the spring of 2009, even though economic output was still falling.

Only three things can happen in these circumstances. The incomes of potential first-time buyers can rise so that they can afford higher prices. House prices can fall to make them compatible with what first-time buyers can currently manage. Or – and this best sums up the present position – the property market comes to a grinding halt.

Miles Shipside of Rightmove said: "Many of those who should be buying for the first time have declared themselves as non-participants in the housing game. Due to the new deposit rules they have to play by, it comes as no surprise that they are staying away, as they are probably busy saving."

The Council of Mortgage Lenders says the number of first-time buyers is down from 500,000 a year at the turn of the century to 200,000.

Governments have sought to address the problem by cutting stamp duty for first-time buyers but the reduction has not been nearly enough to counter what is a deep, structural flaw in the market. Work by Professor Steve Wilcox at the University of York's Centre for Housing Policy showed that in 40 local authority areas back in 2005, 40% of younger working households – the key first-time buyer demographic – were earning enough to pay more than a social sector rent but not enough to buy even the cheapest available home.

The Chartered Institute of Housing (CIH) has a name for this group – the "in-betweens", caught in a twilight zone between housing dependency and fending for themselves. These are precisely the families lionised endlessly by politicians of all colours: the hard-working people who play by the rules, are ambitious to get on, and want to fend for themselves. Hard-working families may be idealised on the hustings but, as Sarah Webb, the CIH chief executive, rightly notes, "they are forgotten when it comes to their housing needs and aspirations".

A century ago only 10% of Britons owned their own homes. The proportion rose steadily in the three decades after the second world war but by the start of the 1980s, about 45% of people still rented their homes from the private or public sector.

The UK then embarked on what market participants call the golden age of owner-occupation. In the first wave during the 1980s, right-to-buy legislation and financial deregulation gave families in council homes the opportunity to buy property at bargain prices. The housing downturn of the early 1990s was then followed by a second wave stimulated by a long period of low inflation, rising employment and cheap money. According to the CIH, this golden age is now over, a conclusion backed up by figures that show owner-occupation in England peaked at 71% in 2002-03 and had fallen to 68% by 2008-09, the year the financial crisis was at its most intense.

So what can be done? Ministers could give councils and other providers the right to build more homes in the parts of the country where people want to live. A combination of nimby-ism and spending cuts makes that unlikely. They could promote an active regional policy that might encourage people to move to those parts of the country oversupplied with homes. Given that the spending cuts are likely to fall heaviest on the regions outside of the south-east, that too looks improbable.

They could, of course, be bolder over tax, imposing a land value tax instead of putting up VAT, an idea backed by Andy Burnham, one of the contenders for the Labour leadership. But that, in property-fixated Britain, is for the birds.

Despite the policy inertia, the market will eventually adjust to the underlying reality. A lack of first-time buyers equals weak activity equals lower prices. It may be a long, drawn-out process.

• Economics
• Housing market
• Real estate
• Mortgage lending figures
• Quantitative easing
• House prices
• Property
• Mortgage arrears
• Mortgages
• Borrowing & debt
• Mortgage rates
• First-time buyers

Analysts at Co-operative Asset Management assess which FTSE 350 companies may have the most sustainable business models

Here, analysts at Co-operative Asset Management look at how some broad industry groups in the FTSE 350 and the companies within them might be affected by sustainability issues. These are not intended as share tips: many other factors may influence returns. A number of the companies highlighted would be ruled out by some socially responsible investors on ethical grounds, for example arms manufacturers and tobacco groups.

As John Reizenstein, chair of CAM, says: "This study is different in setting aside the usual ethical question of 'who are the best corporate citizens?'. Instead, it looks at the long-term trends in the environment and society and offers a view on which companies will have a sustainable business model in a world tested by pollution, resource depletion and demographic change."

However, the big question in this sector, and for the broader economy, is what will happen to oil companies as the world moves through the peak in conventional production. The costs of oil extraction are rising sharply. This financing burden is likely to crowd out other sectors and the economy may reach a point where it simply cannot provide the capital that oil extraction requires. Shell already has to borrow to pay its dividend and BP's is on hold precisely because of sustainability factors – not good news for pension funds.

Elsewhere there are more hopeful stories. Some minerals, particularly platinum, have a significant use in solving environmental challenges, which favours Lonmin and Anglo Platinum.

Gas generates far more energy than coal or oil for a given amount of CO2 and it may therefore become a transition fuel – good news for BG Group.

Mineral resource companies will benefit from demand from emerging markets, but many operate in territories where there is unrest or where they cause pollution problems. Companies with a poor record stand to be punished: Vedanta, with its attempts to mine bauxite from a hill in Orissa that belongs to the Dongria Kondh tribe, has attracted international condemnation and successful legal challenges.

Apart from coal-fired power generators, utility companies tend to come out favourably in sustainability analyses. Water companies such as Severn Trent and Pennon also perform a critical social role: the requirement to maintain supply to those in relative poverty is built into regulated returns.

Few companies specifically address poverty-related markets. However, Smiths Group and Victrex both have significant health businesses that target age-related issues.

Companies that should benefit from ageing populations in developed markets and the health needs of the world's poor include Smith & Nephew, Synergy and GlaxoSmithKline.

Prospects for travel-related businesses are varied. Public transport companies are favoured, both environmentally and for providing mobility to poorer segments of society. Airlines rank badly, with the sector about to be included under the EU Emissions Trading Scheme – with knock-on effects on hotels and business travel. Cruise operator Carnival may fare better: while cruises have high fuel costs and significant environmental impacts, they appeal to older demographics. While the government is subsidising low-carbon vehicles, it still seems unlikely that a large-scale automotive distributor such as Inchcape will make enough per new vehicle to cover the shortfall in big-ticket sales, as demand for larger vehicles such as 4x4s recedes.

General insurers may face increased weather claims. Prudential, HSBC and Standard Life stand out for their emerging markets exposure. St James's Place may benefit from offering advisory services to those moving toward retirement. Experian has an interesting social dynamic: it helps improve financial literacy alongside its credit-checking services, though detractors point to big brother tendencies.

• Mining
• Oil
• Pharmaceuticals industry
• Food & drink industry
• Travel & leisure
• Financial sector
• Manufacturing sector
• Technology sector
• Property
• Engineering
• Royal Dutch Shell
• BP
• Lonmin
• Vedanta Resources
• Severn Trent
• Pennon
• BAE Systems
• Chemring
• St Modwen Properties
• Smith and Nephew
• GlaxoSmithKline
• Carnival
• BT
• Vodafone
• Cable & Wireless
• Prudential
• HSBC
• Standard Life
• St James Place
• Serco
• Experian
• Intertek
• SThree
• Michael Page International
• Hays
• Aggreko
• Johnson Matthey
• RPS Group
• WS Atkins
• Spectris
• Spirax-Sarco Engineering
• Halma
• Smiths Group
• Victrex
• Co-operative Group
• Renewable energy
• Corporate social responsibility

Homeowners will need to be quick out of the blocks to profit from tourists by renting out their properties during the 2012 Games – the race has already started

There are still almost two years to go until London hosts the Olympics, but property agents claim now is the time to start making money from the event. Accommodation, from spare rooms to whole properties, is already being flogged to visitors for the sporting extravaganza which is being held between 27 July and 12 August in 2012.

"Private rental will be a huge success during the Games, as it was in Sydney for the 2000 Olympics, and more recently for the Vancouver Winter Olympics," says Matt Parker, owner of the websites Londonrentmyhouse.com and Sporteventsrentmyhouse.com.

Parker says property owners listing homes on his sites have received inquiries from around the world, including French radio stations wanting accommodation for 15 journalists near to the Olympic Stadium, and groups of friends coming over from the US.

"Overseas visitors, including the athletes' families and coaches, are among the people most likely to want the space of a house rather than the confines of a hotel," concurs Bruce Abbott, who runs Hotelslondonolympicgames.co.uk.

Prime letting locations include Stratford (the site of the Olympic Stadium), Lewisham, the City, Greenwich and Southwark. However, major venues stretch across the UK. People in Manchester, Coventry, Cardiff, Glasgow, Newcastle and Weymouth could also do well out of it. To find out if you're near to an event, see london2012.com.

Some letting agents remain sceptical as to how many owners will make money, while others claim visitors are prepared to pay sky-high prices.

"Two-bed apartments near to major venues will rent for around £2,000 a week immediately before and during the Games," says Tim Broughton, managing director of the holiday rental website Homeaway.com. "A five-bed house in London with good transport connections can usually get around £2,700 a week. But during the Games, owners could get more than £5,000 a week."

Abbott reckons people are willing to pay fees roughly equivalent to a stay in a boutique hotel; around £250 a night. "But we've got a penthouse listed for £2,500 a night," he says.

Homeowners looking to cash in include Annie Wong, who lives in a two-bed apartment in Tower Hamlets, on the outskirts of the Olympic sites.

She's planning to rent out her apartment for £3,000 a week while she stays at her boyfriend's home.

"Making a bulk of cash will be great," says Wong, a sponsorship manager.

"I'll lock my personal things away and provide some new bedding and then people can just use everything else, like my crockery and pots and pans." While tidying up a two-bed apartment may not be too arduous, clearing the clutter from a family home is another matter.

Jason Nisse and his wife Emma want to rent out their five-bed home in Highbury, north London, during the Olympics, but the stress of getting it ready for tenants worries them. The couple plan to holiday in Kent while the Games are on, so they can still go to some events.

Nisse, a consultant, says: "Financially the decision makes sense. We'll make more money renting the house out than we'd spend on holiday.

"We're just trying to decide whether it's worth the hassle."

What to do

Short-term letting agents will do a lot of the legwork for you. Novices may benefit from an experienced hand but should expect agents to take between 15% and 20% of the rental income.

For a DIY route, advertise on one of the "introduction sites" such as Homeaway.com (£219 a year) or Pureholidayhomes.com (£150 a year), or free on Hotelslondonolympicgames.co.uk.

If you rent out a property, you need to carry out basic checks, including gas and electrical appliances. For details, including tenancy agreements, see the Citizens Advice site at Adviceguide.org.uk.

Basics

The terms and conditions of mortgage agreements mean that you'll have to tell your lender you are renting out the property. But, as this is only for three weeks or so, it shouldn't be a problem. Insurance shouldn't be too tricky either, says Jonathan Cracknell, household underwriter at Aviva. It's unlikely to affect your premium and you'll still be covered for the biggies, such as fire, storm and flood damage, and theft.

"But most insurance policies won't cover your home for loss or damage caused by theft, malicious damage or accidental damage by the tenants during their stay," he warns.

Tax

Even if you rent your home for a month or less, you need to declare the earnings to HM Revenue & Customs.

"However, you can reduce the tax liability on the income received by claiming expenses against the rental income," points out Ronnie Ludwig, a partner at accountants Saffery Champness.

"Expenses can include letting agents' fees, advertising expenses, fair wear and tear, and painting and decorating," he says. For further details, log on to the government website direct.gov.uk.

The risks

Once a potential tenant gets in touch, put their name, along with the word "scam" into Google, says Andrew Buonocore, who runs Olympicletting.com.

He also suggests checking out the rental applicant's Facebook page: is it believable? Any email can be traced to a geographical location so, if you find that, for instance, an email from Chuck Jefferson of New York was sent from Bucharest, you should tread carefully, he warns.

"And remember, if someone suddenly offers you 20% extra in fees to speed up a rental agreement, be 100% more wary. There's no point letting your home out if you then have to spend the whole month worrying about it," adds Buonocore.

IT'S not just during the Olympics that you can make cash from your property.

• Property
• Renting property
• Olympic games 2012

A survey for the National Housing Federation highlights the bleak scale of Britain's financial crisis

Today's young adults will have to wait until middle age to buy their first home if they stay single, according to new research that makes depressing reading for anyone not yet on the housing ladder.

A survey for the National Housing Federation (NHF), which represents England's housing associations, predicts that in some regions the average 21-year-old will not buy their first home until they are in their 50s.

The survey, conducted by the consultancy firm Oxford Economics, highlights the scale of the housing crisis. It suggests that the average, single young adult may only be given the keys to their own place when they hit 43 – providing that they have had no children and have saved a lot of money over the previous two decades. For those wanting to buy in London, the average age for a first-time buyer rises to 52, which may in itself make it hard for them to obtain a mortgage.

The research found the picture only mildly better in the south-west, where single adults will on average get their own place at 48. In the south-east, the average age falls to 45.

The forecasts are based on how long the average 21-year-old will have to wait until they can afford both a 20% deposit and earn enough money to qualify for a mortgage. The research assumes buyers have an average credit rating and can borrow 3.75 times their salary, are in full-time employment and do not live at home with their parents.

It suggests that couples who stay together from the age of 21, save hard and delay having a family should be able to afford their own place at 27.

"First-time buyers will have to save religiously for two decades before they can finally afford to get their own place, by which time they're likely to be in their 40s and delayed having a family," said NHF chief executive David Orr. "This report highlights how home ownership is increasingly becoming a pipe dream rather than a reality for millions of young people without wealthy parents to support them and demonstrates the scale of the crisis."

The NHF has warned changes to planning laws and funding cuts will have a further impact on the supply of affordable housing.

• Housing
• Mortgages
• House prices
• Property

Frequent house moving can be bad for your children

If you are contemplating moving house and are prone to doing so frequently, be sure it's really necessary. Not only do repeated moves upset children, they have long-term effects on the whole family.

As everyone knows, house moves are one of the most stressful of life events for adults, risking mental and physical health. But children are also affected. Ones who move frequently do worse at school and are worse behaved than ones whose homes do not keep changing. Frequently moving teens smoke, drink and attempt suicide more. These effects apply as much to rich and poor families, and to children of relatively educated or uneducated parents.

Now comes powerful evidence that frequent childhood moves have adverse long-term consequences. More than 7,000 American adults were asked how frequently they had moved during childhood, surveyed in 1994-5 and again 10 years later. Regardless of age, gender and social class, the more moves as children, the worse the adult's life satisfaction and emotional wellbeing. They were more likely to die younger, probably because of the impact of raised stress (cortisol) levels.

A basic reason was that, as adults, the frequent childhood movers had fewer, lower-quality social relationships. As many previous studies have shown, childhood friendships play an important role in subsequent confidence and social skills. If early friendship networks keep changing, because uprooted by house moves, this study implies that there is long-term damage to adult friendship-making.

However, it did depend to some degree on what sort of person the child and adult was. The introverts in the sample who had moved frequently were more likely to have poor adult social networks than introverts with few moves, largely explaining their ill-being. By contrast, extroverts who had been frequent movers as children were less harmed, probably because they managed to strike up better social networks. Neurotic (moody, nervous and highly strung) people also suffered more if they had been frequent childhood movers: jumpy pessimists prefer childhood stability.

It could be argued that the results only apply to America. The authors comment that "residential mobility has been one of the defining characteristics of the American ethos since its inception." Perhaps wryly, they continue: "Many Americans move to another city in search of a better education, job, lifestyle and their inalienable right, happiness."

However, there are strong reasons to suppose that this ethos has transferred to Britain. Since the sale of council houses in the 1980s, and the massive increase in the availability of credit, home-owning has spiralled upwards – 70% of us now own homes, compared with 40% of the French. With the loss of security for people who rent, starting in the 1980s, ownership looked attractive for Britons.

Increasingly, we have come to regard our bricks and mortar as pensions and capital wealth, with average saving collapsing altogether until the credit crunch. Many families regard house moves as essential for financial security and as important markers of status.

In many studies, debt has been shown to be a key cause of mental illness. Household indebtedness went up from £200bn to £500bn between 1979 and 1990, and it accelerated from there to a staggering £1,400bn by 2008, mostly as a result of property fever.

As parents, not only do we need to think very hard about the potential problems we may be causing ourselves by our addiction to large mortgages, but also we need to factor in the long-term effect of frequent house moves on our children.

House moves and ill-being: Oishi, S et al, 2010, Journal of Personality and Social Psychology, 98, 980-94. More Oliver James at selfishcapitalist.com.

• Family
• Property
• Housing
• Children

My husband is out of work but reluctant to take on a house to do up. His lack of motivation frustrates me. Should I move alone?

My 51-year-old husband is about to become unemployed again – the third time in two years. Only five years qualified, he suffered a severe knock-back to his confidence two years ago, when, for no given reason, he wasn't kept on after a probationary period. He feels pessimistic about finding permanent work in the near future. As I have been keen to move for some years, my suggestion is for us to move to a property that he could renovate while out of work. His reasons for not moving previously have mainly been that a smaller house in a more expensive location did not justify the higher mortgage payments; this continues to be the reason for his reluctance to renovate an affordable property out of the inner city. He has shown some interest in building our own ecological home, but the pace of his research into the feasibility of this is very slow. I'm impatient to move as we have been putting off structural and cosmetic improvements to our house (my daughter's bedroom has smelled of mould for the last 16 years), because we didn't think we'd stay long enough to warrant the outlay. I have been the breadwinner throughout his undergraduate and postgraduate professional training and, though I know he's not responsible for the lack of employment in his profession, I am beginning to despair that if we do not jointly employ our talents it will be too late. Should I move alone? M, via email

I'm struck by the coldness in your letter. I don't say this judgmentally: you've supported your husband financially for some years and now you feel as if your husband's lack of motivation, job and money is holding you back. That's not easy for you. But nowhere do you seem to acknowledge how demoralised your husband must be. It must be hard for him to get out of bed in the morning, let alone think about moving or building another house. It's like, "Oh dear, husband out of work again, but I want a new house."

I totally understand that feeling of wanting to be looked after, thinking that, at your time of life, you deserve to be able to at least do up a house. But what you ask me is "should I move alone?". This isn't just about moving though, surely?

Your idea is a good one in principle: he's not at work, he will have time to do up a house. That presupposes two things: he will be able to juggle doing up a house with job-hunting. And that he will ever work again. I don't want to be pessimistic here, but it's not going to be quite so clear cut as him being able to do up a house, finish it and then get another job. The reality is that he will be lumbered with two simultaneous projects: house renovating and job-hunting. I fear the combination of two such stressful things might be too much.

If he were more motivated, and had a job, would you consider leaving him? Is this all a convenient peg on which to hang your "dissatisfied coat"? Can you afford to move, and do all the things you want to, alone? If the answer to all of those questions is yes, then maybe you should (after couples counselling) leave. But be clear about what you're doing, and why. If your marriage is over, then it's over, whether or not you renovate or move.

If not, and if you're sure moving or working on your current house won't put you in financial peril, then line up some houses to view together to start the ball rolling; this may inspire him. Is doing some work on your current house really not an option? Only you seem to have been saying this for 16 years, and not done anything about it yet. Do you really have to move to a house that also needs work? And what are you so afraid it'll be "too late" for? Surely not just moving?

For the record, I think your husband's reluctance to heap more financial commitments on the family is actually rather sensible, given your circumstances.

Contact Annalisa Barbieri, The Guardian, Kings Place, 90 York Way, London N1 9GU or email annalisa.barbieri@mac.com. Annalisa regrets she cannot enter into personal correspondence

• Family
• Job hunting
• Work & careers
• Property
• Home improvements

Ring roads and roundabouts, yes, but bloomin' good schools

What's going for it? No, I wasn't at the V Festival. I was in Chelmsford for proper cultural reasons, checking out the architecture of the new Salvation Army Citadel. And very modern it is, too – not quite a drive-in church, but offering worship a few metres from the dual carriageway, almost. That's Chelmsford all over. In the 60s it forgot it was a pleasant historic county town and threw in its lot with Los Angeles, covering the place with ring roads and pumping it full of commuters. Today you can still winkle out lovely corners of the way life used to be – its pretty Shire Hall, the water meadows and parks along the rivers, the tiny flint-studded cathedral; it's just they're carved up from one another, as if they'd never been part of one town at all, and set within a landscape that's almost entirely one giant suburb. Still, not as bad as you might think. Could be worse. Good schools, too.

The case against What do you think? Ring roads. Access roads. Bypasses. Roundabouts. And still chronic traffic problems. An in-built denial that it's actually a town, with history, complexity, etc, not just a filler between your front drive and the supermarket. Mundanity. A cultural black hole: county cricket makes up for some of this, though.

Well connected? See above. The train's peachier: four an hour to London (35 minutes); two an hour to Ipswich (39-44 minutes), and then beyond to Harwich and Norwich. Stansted airport is a 30-minute drive.

Schools Good. Newlands Spring, Barnes Farm and The Tyrrells all "outstanding" primaries, according to Ofsted. Secondaries: The Boswells is "good" with some "outstanding" features and Chelmsford County High for Girls and King Edward VI Grammar "outstanding".

Hang out at... Barda's, the place to take the wife for a slinky night out. Velouté, pork cheeks, etc.

Where to buy Despite the suburban-ness, it's the village life that's most prized. Proper villages, like Georgian Writtle, or Sandon, for first preference. Then posh villagey suburbs – Broomfield, Springfield, Great Baddow. Then fake villagey suburbs like the new-built, old-style Beaulieu Park or Chancellor Park. If you have to admit to living in Chelmsford, "Old" (ie, Victorian) Moulsham has nice terraces and semis.

Market values Huge piles, £500,000-£900,000. Detacheds, £230,000-£500,000. Semis, £185,000-£380,000. Terraces, £165,000-£300,000. Flats, £95,000-£220,000.

Bargain of the week It's not pretty, but a four-bed semi with big garden on the south side of town for £240,000 isn't bad: Adrians (01245 265303).

• Live in Chelmsford? Join the debate at guardian.co.uk/letsmoveto

Do you live in Budleigh Salterton, Devon? Do you have a favourite haunt or a pet hate? If so, please write, by Tuesday 31 August, to

• Property
• Homes

Prices went up by 6.7% over the past year, but experts remain cautious as first-time buyers continue to struggle

House prices in England and Wales have increased by 6.7% during the past year, taking the average property price to £166,798, according to figures released by the Land Registry today.

Nine regions experienced increases in their average property values over the last 12 months, with London seeing the biggest increase of 12.1%. However, properties in the north-east fell in value over the year by 1.4 per cent.

Prices went up by an average of 0.4% from June to July. Homes in the south-west experienced the greatest monthly rise with a movement of 2.2%, while Wales experienced the most significant monthly price fall, of 1.1%.

The most up-to-date figures available show that during May 2010, the total number of completed house sales in England and Wales rose by 8% to 49,412 from 45,814 in May 2009. However, purchases of more expensive properties soared with the number in England and Wales sold for more than £1m increasing by 67 per cent between May 2009 and May 2010, from 255 to 426.

David Newnes, the managing director of LSL, owner of national chains Your Move and Reeds Rains, said: "House prices showed signs of growth in July as buyers took advantage of a slight easing in lending conditions to secure their new home.

"That's not to say the house prices will resume a sustained upwards climb. We don't expect a return to the mini-boom of late last year, but the likelihood of a significant slide in prices is small too – it is more likely we will see steady change.

"Monthly house price fluctuations are likely to continue in the short term, and there will be strong regional variations, particularly as the coming budget cuts hit some parts of the country more severely than others."

He added that longer term recovery in the housing market depends on lenders offering first-timers more affordable mortgage products. "Thousands of would-be buyers are waiting for the finance to grasp the first rung on the property ladder, and unlocking this demand is crucial to the market's recovery," he said.

Jonathan Moore, director of www.easyroommate.co.uk, agreed: "House prices climbed up in July – but let's not get carried away. Prices have fluctuated in recent months – and different indices are reporting conflicting results. But one thing is clear. Would-be first-time buyers are still being priced out of the market. Halifax estimates a house is 4.75 times the average first-timer's wage – and that's for those lucky few who can get a mortgage.

"In addition to unaffordable house prices, many buyers can't stump up the huge deposits lenders require. Many would-be buyers are being forced to remain in flatshares and rented accommodation for longer while they wait for the situation to improve."

However, the Primelocation.com Rime Index for August, also out today, shows that following four months of healthy growth, the average price of a UK prime property (the top 25% of all UK property by value) slipped 0.3% to £457,052, while the average platinum property (the top 10% by value) has fallen by 0.4% to £638,366. Wales, Yorkshire and the Humber and the north-west were the only regions to see prices rise from July levels in both the prime and prime platinum tiers.

Andrew Smith, research director at Primelocation.com, said: "Top-end vendors have continued to put their properties on the market and now that buyers have a healthy range of quality property to choose from, upward pressure on prices has eased in all but the most sought-after areas. This trend has been exaggerated as buyers put their search on hold over the summer and act with increased caution due to renewed fears of a downturn in the economy."

• House prices
• Property
• Housing market
• Recession
• Economics