Property: Help for a lending hand

WITH the housing market seen as ever more central to economic recovery, reforms in the lending system look increasingly likely. Even the big players agree that changes are needed, and are now backing reforms.

Gary Marsh and David Gilchrist at the Halifax Building Society have produced an agenda for recovery, The UK Housing Market - From Recession to Recovery, which gives free-marketeers short shrift, insisting that intervention is 'acceptable and necessary'.

Top of their list of changes (all of which, they admit, need 'substantial' research) is the raising of the pounds 30,000 tax-relief ceiling for first-time buyers, plus 'consideration' given to gradually phasing out relief for existing owners. Then they suggest a more substantial reform - integrating housing benefit and mortgage relief. This would help low-paid buyers who miss out on the aid available if they rent.

Their final suggestion - to ease lending restrictions to provide 'top- up' loans for those trapped in homes that are worth less than their mortgage - was implemented last week, which suggests the other measures may be closer than expected. After all, swift U- turns are back in fashion.

SOME people will go to the ends of the earth to sell their home. They might even find a new way of attracting buyers when they get there.

Peter and Gillian Jones, for example, are offering two return air fares to New Zealand plus 10 days' accommodation to the buyers of their cottage near St Ives on the Cornish coast. All that expense might seem disproportionate for a property worth pounds 58,000, but it adds up to little more than the savings made by not using an agent, Mr Jones says. The bed and breakfast costs them nothing, as it will be in the couple's other home on the other side of the globe.

This sort of special offer does not seem unusual to the Cornishman, who returned here with his New Zealand wife a couple of years ago and almost immediately decided to go back. 'Owners are much more imaginative over there,' he says. 'If you cannot sell, it is quite common to leave some equity in the house to be repaid later. When I bought my place 15 years ago, the seller postponed payment of dollars 10,000 for five years, interest-free.'

They do not want to do that now because they would prefer a clean break, settling in New Zealand after a life of globe- trotting. It might make more sense, though. The special offer on the cottage, which has fallen in value from pounds 72,000 over the last three years, has not yet brought in a single inquiry.

FRENCH holiday homes may prove a testing ground closer to home for these New Zealand tactics. Many Brits want to retire to France but cannot sell their existing homes or are too old to borrow, according to specialist agent Frank Rutherford. So he has introduced a 50/50 deal where buyers put down half the cash now and pay the rest in a year or two.

An extra amount is added in lieu of interest, but this is based on appreciation in the property value rather than general loan rates, so a cottage near the Dordogne can be bought for either the full pounds 75,000 today or pounds 37,500 down and about an extra pounds 41,300 payable in 1994.

Devaluation has cast a long shadow over this already depressed market where hundreds of owners are stranded with second homes they can no longer afford. Nevertheless Mr Rutherford, who was selling in France long before it became a fashionable gravy train, remains unruffled. Sterling has plunged three times in the past 25 years and buyers were never put off, he says. Once the dust settles, they simply adjust their budget and continue the search.

One important factor is that Brits usually sell to other Brits rather than to the French, who can never understand the attraction of farmhouses they abandoned years ago. 'Owners will be glad to get back their original sterling price, so buyers will not have to pay more,' he says. And if a French buyer does happen to turn up, the extra strength of francs will claw back some of the losses owners might have made. (Rutherfords: 071-351 4454.)