Can't stand the tenants and can't sell the flat

BUYING a home for your children at college was the way to save money a few years ago. Letting out rooms to other students eased mortgage costs, and rising prices left a profit at the end, even after capital gains tax. But many were caught out by the crash and now have a second home they cannot sell.

The Jones family in London (who prefer not to reveal their real name) are seething about their treatment from letting agents in Bath, where they have a flat bought for their daughter when she was at university. 'The neighbours rang to complain they could not sleep for the noise created by one set of tenants,' Mrs Jones says. 'Another lot spent their time jeering at passers-by.'

Now the flat must be totally redecorated because they have found the walls daubed, carpets torn and mattresses stained and piled on the floor. All the time the agents were taking 15 per cent of the rent.

'My daughter visited three firms before choosing this one and we made sure we had good references from tenants,' Mrs Jones says. 'We relied on them because we could not keep making a three-hour journey to the flat.'

These reluctant landlords cannot find a buyer, and even if they did they would still make a loss, as prices have fallen by more than 10 per cent.

John Birch, deputy chairman of the Association of Residential Letting Agents (Arla), argues that no one can guarantee the good behaviour of tenants. But his 500-plus member firms sign a code of conduct promising to inspect three times a year and they can face disciplinary measures if they fall down on the job. Despite an average of one complaint a week, however, only three members have been expelled in 10 years. 'We can usually sort things out within a couple of weeks so both sides are happy,' he says.

Arla is contactable on 071-734 0655.

A FLURRY of calls has come from readers confused about whether cut- price mortgages are as cheap as they are made out to be. Jennifer Plomley in Liverpool was worried about Cheltenham & Gloucester's 8.25 per cent fixed rate because the APR (that figure always quoted in brackets) was 10.8 per cent. 'We could manage the lower figure but not the other,' she says. 'Anyway, why are there two rates?'

To add to the confusion, the APR dropped to 10 per cent within a few days, prompting more quizzical calls.

The explanation is reasonably simple but hard to grasp. Lenders impose interest and extra charges in different ways, and a few years ago were told to reveal the true cost so borrowers could compare like with like. To cut a long explanation short, this is the APR - annual percentage rate - and should normally be used to find the cheapest mortgage.

Fixed-rate deals are different, however, because what you see is what you get. Ms Plomley would pay 8.25 per cent for two years. The APR works on the assumption she switches to variable rates at the end of this period. This is almost academic, as it is worked out at today's variable rate, and who knows what the prevailing level will be in two years' time? But it does explain how the APR fell to 10 per cent when C&G reduced its variable rates a couple of weeks ago. It also shows that buyers should look behind the headlines to see the real value of special offers. They should also ask: 'What if . . . ?'

If rates keep falling, you may end up paying too much, in which case the best bet may be a capped rather than fixed- rate loan; this stops your expenses going up but allows them to go down. If mortgages go up, you save money, but when the fixed-rate scheme ends you face a big jump in outgoings, which should be planned for well in advance.

NO ONE IN Leeds was surprised to hear that the city will put the fleshpots of the South in the shade by the end of the decade. As people pour in, searching for better and cheaper lifestyles, the locals have tried hard not to adopt an 'I-told-you-so' expression. They fail, of course.

Jobs will rise almost 10 per cent in the Nineties, while London continues to struggle, says a report by one leading economist. Several hundred of the 1,000 newcomers expected through relocation of the Department of Social Security's headquarters from London are already home-hunting, helping to keep the market churning.

Charles Peck of Halifax Property Services says these newcomers are important because they range right the way from first-time to top-market buyers. They will find that the North-South gap is still a long way from closing.

The average semi costs a bit more than pounds 59,000 - half that for Greater London and almost pounds 8,000 less than in Romford, one of its Essex suburbs, according to the Halifax Building Society. An average terrace sells at less than pounds 40,000, or 50 per cent of the Greater London level.

A three-bedroom semi in the village of Gildersome, near Leeds, sold recently for pounds 53,000, almost pounds 4,000 less than when it came on the market two months earlier, says Mr Peck. A three- bedroom terrace repossession fell pounds 5,000 in four months to pounds 33,000, although a bungalow in the Adel district on the outskirts of Leeds was snapped up in four days with a cash offer of pounds 140,000, a drop of pounds 5,000.