BUILDERS RELYING ON SALES INCENTIVES

It removes the problem of buyers having to hand over a large cash lump sum on exchange of contracts and possibly waiting weeks, months, even years for completion. Instead, they pay a few hundred pounds for the bond, and then find all the money required to buy on completion.

On a £200,000 property, for instance, an Exchange Bond instead of the 10% deposit to cover a six month gap between exchange and completion costs the buyer only £850 - and allows them to keep saving until they move in.

The Exchange Bond concept particularly appeals to 'off-plan' buyers - both in the UK and on homes abroad.

Says Frank Speight at The Exchange Bond: "We launched this concept in May 2005, and the number of builders using it nationwide is somewhere north of 250, including Taylor Wimpey, Countryside, Miller Homes and Higgins Homes.

"The mood among developers is certainly not the doom and despair suggested by media reports - although we have had more enquiries from developers keen to use the Exchange Bond in the past six to eight weeks than in the previous four months.

"Developers generally want to widen the range of their incentives."

So rapidly has the exchange bond concept taken off that a rival product launched in 2007 - The Zurich Property Deposit Guarantee from the XBond Company - has linked with Barratt Developments and claims a 30% share of the new homes market.

The fee charged on the Zurich Property Deposit Guarantee is 4.99% of sum assured for a one year term - which is often cheaper than borrowing in the High Street, and may be less than the interest lost on savings which would otherwise need to be handed over at the exchange stage.

:: There is "no cause for alarm" at the residential property market, says the Assetz House Price Watch based on the five major UK house price indices by the property investment company Assetz.

Stuart Law, Assetz chief executive, claims the UK buy-to-let market is "just about the strongest in the world - and predicts that rising rents in London and in regions including the North-West will produce a housing market in 2008 which is "robust, if a little volatile, buoyed by immigration, lower interest rates and continued lack of supply".

Manchester-based Assetz is a property investment company scouring units both in the UK and abroad.

:: INFORMATION: Exchange Bond (01371 877 200 and www.exchangebond.com); Zurich Property Deposit Guarantee (0845 882 2888 and www.thexbond.com); Assetz (0161 456 4000 and www.assetz.co.uk).

:: HOW TO GET FIRST-TIMERS INTO A HOME

The fifth First Time Buyer review from Halifax found the average house unaffordable for buyers in 466 of 483 towns surveyed - with Bootle in Merseyside the most affordable place to start, and Henley in Oxfordshire the most impossible.

The average price paid by a first time buyer zoomed by 15% in 2007 to just over £175,000 - up 82% from the £95,994 figure recorded in 2002.

Says Halifax chief economist Martin Ellis: "Many potential first time buyers have been priced out. Despite the increase in prices in the past few years, the financial position of first time buyers is sound and they, on average, put down a 20% deposit equivalent to more than a year's earnings.

"There is no quick fix to the first time buyer problem. A subdued housing market over the next few years is a positive step for potential new entrants."

However, David Pretty, recently retired head of Barratt Developments who now chairs the New Homes Marketing Board, thinks much more can be done to help 'first timers'.

His five point plan includes:

:: Raise Stamp Duty threshold to £250,000 for first time buyers. It currently starts at 1% above £125,000 and adds at least £1,750 to the price of a typical first home.

:: Nearly half (46%) of first time buyers get a parental contribution to buy a place of their own - and the contribution averaged £21,300 in 2007.

Mr Pretty wants parents to get tax breaks to turbo-charge the value of their contribution.

:: Speed up the release of Government-owned (possibly 13,000 acres) and local authority-owned land suitable for housing. At least 25% of homes built on this land should be set aside for first timers.

:: Sell Government land at a discount for new homes - in return for a permanent discount on first time buyer homes. Land sold cheaply, for instance, could slash the price of a South-East starter home from £200,000 to £170,000.

:: Fast track planning application for first time buyer homes - these applications typically take an average 15 months to get through town hall planning systems, compared with around 12 weeks in the 1970s.

The 300,000 first time buyers recorded in 2007 compares with 532,000 in 2002. Unless prices fall drastically, the figure is unlikely to rise sharply in 2008.

Says Mr Pretty: "Unless we do something drastic, the buyers' market expected in 2008 will be only a temporary respite to potential first timers.

"In Southern Ireland, stamp duty was scrapped entirely for first time buyers last year, subject to certain restrictions. I don't see why we can't do something on similar lines."

Mr Pretty also believes that tax breaks for parents who put money into their children's properties would help to get more key workers closer to their jobs.

:: FROM IRISH CASTLE TO SURREY COMMUTER BELT

Richard Good-Stephenson is a property developer with a difference. After 15 years as an airline pilot, he was acutely aware of the emissions can damage our environment - and that UK housing accounts for 50% of the CO2 output.

A few years ago Richard and his wife inherited a castle in County Cork Ireland, which has been in Richard's family since it was built in the 16th century. However, in the 1920s, like many other larger houses of Ireland, it was burned and Richard's grandparents moved into other premises on the castle grounds.

Since he was a little boy, Richard has dreamed of renovating the castle to its former glory. So he teamed up with Kevin Holbrook and moved to Cork to set up a company dedicated to the preservation of traditional crafts: Lochplace Building Conservation.

Restoring Cor Castle to its former glory was one of Lochplace's first projects - and the Good-Stephensons finally moved in a year ago.

Considering the castle was essentially a ruin, it was a massive job. New merlons were cast and fitted on top of the castellations, the tower rebuilt and reroofed, and all 54 windows of the building replaced, along with addition of an underfloor heating system. Each room has been carefully renovated and decorated.

The garden is now being landscaped, and the front door of the castle, made by a local joiner from an oak tree which was uprooted on the grounds is testament to Richard's dedication to this project.

The problem of heating a 5,500 sq ft building was overcome by using a ground source geo-thermal heating system which can heat the entire castle for £10 a day.

Richard quit his pilot's job with BA as the Castle project became a success - and his Lochplace group of companies has tackled projects in Surrey, Sussex and Southern Ireland with the emphasis on energy conservation and the careful restoration of old buildings.

On the waterfront in Kinsale, County Cork, a large warehouse formerly used as a fish processing plant was a roofless ruin - until Lochplace created a 7,000 sq ft home which fetched about £2 million.

Richard used his expert knowledge of Reigate, Surrey, to track down a Victorian country house standing in three acres, and used formerly as an old people's home and a college. He is converting it into seven luxury apartments, ranging from two pieds-a-terre of about 600 sq ft each expected to sell for around £350,00, up to a 3,200 sq ft penthouse at £1.5 million.

Says Richard: "We are dividing the property vertically, which means all original room sizes can be maintained. It's a lovely old building, so all decorative plasterwork and joinery can be restored to its original glory."

The list of 'green' features to be included in their latest housing scheme in Reigate, Surrey, includes rainwater harvesting, heat recovery ventilation and cellulose-recycled insulation in the roofspaces.

"It is the way I believe the market is going. We want to stay ahead of the game", says Richard.

An estate agent is still being selected to handle the scheme, which goes in sale in March when building work is due to be completed. Apart from the pieds-a-terre, prices are likely to range from £500,000 to £1.5 million.

:: INFORMATION: Richard Good-Stephenson can be contacted at the Lochplace group of companies on 01737 245 554.

:: WILL AUCTIONS REFLECT MARKET GLOOM?

The auction room could give the first significant signal of buyer confidence in 2008.

According to Clive Emson, whose December trio of sales of properties in Kent, Sussex, Hampshire and the Isle of Wight rattled up £13 million for an average success rate of 85%, "the market is far from dead".

However, the latest brochure from Countrywide - for sales in Manchester (Jan 28), Leeds (Jan 29), Birmingham (Jan 31) and London (Feb 5) - suggests vendors might have lost their nerve before bidders. It's a bit thinner than usual.

It includes a pair of one bedroomed houses in Wavertree, Liverpool - tipped as a 2008 hotspot by Halifax - guided at £175,000-plus - and a couple of the two bedroomed flats in the Hacienda block in Whitworth Street West, Manchester, from £145,000.

A two bedroomed ground floor flat in the Worsley district of Manchester will surely tempt investors with a guide of £60,000-£65,000.

Other attractive flats on offer include a one bedroomed flat in a warehouse in York Street, Liverpool (£80,000-plus) and a ground floor flat in Halifax, West Yorkshire (£70,000-plus).

A bid of £25,00-£30,000 might be enough to secure an end-terraced house in Rhodes Street, Hull. It might be a two bedroomed home, but the auctioneers haven't got in yet to check.

:: INFORMATION: Countrywide Property Auctions (0906 666 2468).

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