This couple can get a �140,000 mortgage but are determined not to borrow over �120,000 for a three-bed Victorian semi-detached house in Ipswich. They have saved a deposit of just under �5,000.

They recently lost �500 in solicitors' fees when the house they were in the process of buying came off the market.

The experience left them convinced that vendors should pay for surveys on houses, just as people selling cars pay for MOTs.

Paul, 33, and Karen, 34, are on a combined salary of �47,000. "We do consider ourselves quite lucky - there is no affordable housing for lower wage earners," says Paul.

"But we are worried about buying right now as we remember the last property crash and know people who were caught in a negative equity situation."

Rob Clifford Mortgage Force

Paul and Karen's present situation is unfortunate but regrettably not uncommon in the present climate of rapidly escalating house prices when many would-be purchasers have been gazumped and lost money.

As prospective purchasers, their joint income will support a mortgage of around �140,000 from several lenders, although they are sensibly looking at properties at around �120,000.

They have saved a deposit of around �5,000 but if they can save a further �1,000 they will only need to borrow 95% of the value of the house and possibly avoid paying a Mortgage Indemnity Premium.

As Paul and Karen are first-time buyers, it may be sensible to take advantage of one of the low fixed rates available.

By choosing a fixed rate now, they will be assured of their mortgage payments over the next few years and will not be affected by any interest rate rises.

Warnings

The couple are right to have some concerns over the possible fall in house prices, echoing the problems in the early 1990s.

However, most pundits agree that if stagnation was to happen, house prices are unlikely to fall to the same degree.

They will already have a cushion of 5%, plus any further increases in the value of their house, prior to any fall in the value of their property.

How the government could help

The problem of gazumping will always be with us until the government decides to offer protection to prospective purchasers.

Sellers Packs, as already trialled by the government, would offer a solution. This is a system whereby surveys of houses are provided by the seller to the buyer.

Adopting the Scottish system of pre-purchase contracts would also benefit English house buyers.

Estate Agents, assisting with the costs as a marketing opportunity, could well mitigate the downside of the cost implication to the seller.