The Credit Crunch and Housing

In the current financial doldrums, the question of what to do with your house or flat becomes even more challenging than usual. Many career breakers, especially more mature ones, have substantial assets tied up in housing. These may include buy-to-let properties as well as the one in which they live.

With prices still falling, you may no longer feel the need either to get onto the housing ladder or to remain thereon. Prices are generally forecast to fall over the coming year, so even if you do want to buy it might pay to do so later on. If you wish to sell, then of course you will have to offer an attractive price to stand any chance in the current market.

The slump in housing prices has an upside in the rental market. Because people are delaying planned purchases, rental houses and flats are more in demand. In most areas, prices are firm or rising (though not everywhere - see below). Thus, if you want to rent out your property while away, and if you are not in an area of oversupply, the proposition is now more attractive.

If you intend to sell your house, keep in mind the option of offering it at an auction. Over the last few years, an increasing number of people are buying at auctions, and the market is no longer dominated by collapsing barns, repossessions and unusual types of properties.

Auctioning has one notable advantage over conventional house selling: that of speed. Career-breakers wanting to get away quickly or by a determined date should definitely consider the method. Within two months of putting your house up for auction, you could be out of it and have the money in your pocket.

In the current climate auction results have been patchy, with some locations and property types being much more marketable than others. It is more important than ever to set a realistic reserve price, usually at least 10% lower than the guide price, which in turn should be moderate. Auctions are attended by bargain-hunters, among others, so the more attractive your price is the more likely you are to succeed. Check with your local estate agent's auction facilities (many have links to major organisations) and heed their advice. If you Google 'property auction', you will encounter a plethora of websites offering information and advice.

If you plan to rent out your house or flat, good management of your property is essential, especially if you are distant and out of touch with the UK. As elsewhere in the commercial world, indifferent and downright incompetent managers are far more prevalent than the capable and conscientious. Ask around and investigate your local scene, then pick the best available, even if their fees are higher than some others.

In the current climate, flats present some extra hazards. In certain areas (Leeds and Maidstone, for example), there has been such overbuilding for both buy-to-let and normal residency markets that prices have crashed by as much as 50%. Some landlords, desperate for cash, are renting flats to more disruptive tenants than they might have otherwise, or are sub-letting flats for a night or two at a time to the so-called 'party' market. Such practices obviously have a detrimental impact on the values of other flats in the block, as sensible people will move out and less constructive types will take over eventually.

We have encountered some examples of management companies who will not undertake essential maintenance work for commonly owned areas (whether relating to flats or certain types of housing) until all occupiers have paid their share. In the current market, there is a greater temptation to do this. Hence, check out specifically the terms under which common maintenance is to be carried out, and that the management agency actually does what it is supposed to. Otherwise, you could return to a property that has degraded substantially in your absence.

In sum, housing is among the most difficult problems facing the career-breaker, especially one looking to remain away for many months or more. As with many real-life problems, there may be no easy solutions. Careful evaluation of your options and thorough planning will help minimise (although not eliminate) your risks. And remember, property is not just an investment, it's also your home.

Other credit crunch pages

• Credit crunch homepage
• Your career break and the credit crunch
• Credit crunch pensions and investments
• Credit crunch fear factor
• Credit crunch special offers
• Credit crunch bingo

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