You can give petrol prices the slip by running your car on cooking oil - but is it worth all the hassle? Grease is the word, says Adrian Holliday

With petrol prices poised to soar again this summer, anyone like me who has already tried to run a car on waste vegetable oil could have much to feel smug about.

The AA has been warning drivers of another summer of "petrol madness", as rumours spread of oil prices hitting $100 for a barrel of crude. But after driving my ageing Merc on waste vegetable oil for the last 18 months, my smugness is mixed with realism. There have been too many "un-smug" moments, like the day I found myself late for a wedding while creeping along the M40 at 45mph and unable to go faster thanks to a fuel filter crammed with kebab fat. There are too many items in my wardrobe with a dubious bouquet and my hall carpet has acquired a worryingly deep-fat shine. But there is an upside - I can now drive anywhere in the country for pennies.

I bought my Mercedes 190 2.5 diesel for its mechanical simplicity and comfort. But after running it for a while someone suggested that I should try it on vegetable oil. "Old diesel Mercs are ideal to run on veg," he said confidently.

After researching conversion methods, I played safe and opted for a twin-tank vegetable oil conversion, rather than just pouring filtered waste oil into the fuel tank. A twin-tank route means that you can start the car on diesel - which flows from a marine plastic tank in the boot - until the engine is warm enough to suck the thicker, heavier vegetable oil from the main tank. A company called Regenatec - which recently stopped trading - sold me a Smartveg conversion kit for £520 and I paid a garage £400 for a garage to fit it. Total cost? A bit more than £1,000 after the addition of a heated fuel filter. It seemed like lot of money to spend on a car that hadn't cost much more than that to buy. But, if the car held up for a few more years and I could find a chip shop willing to offload its used oil for free, I'd be quids in.

That was 15,000 miles ago and the twin-tank conversion route is one that, on balance, I now slightly regret. It works well for many cars, but the Smartveg system brings with it some under-bonnet plumbing that needs periodic maintenance. Some of this now ageing plumbing is, I suspect, responsible for recent air leaks that have compromised the engine's smooth running and starting. However, the twin-tank approach is kinder to the engine, especially in winter, and is essential for more modern engines, though my car could have coped without it.

I find that I have more than broken even. A local gastropub now supplies me with 120 litres a month of its KTC-branded waste oil for no charge. If I wanted to - allowing for a tiny bit of diesel use at the start -I can drive from London to Inverness for about 75p. When diesel prices were peaking, this trip would have cost me £75. The savings can be sensational.

Running your car on vegetable oil - be it a modern turbo-diesel or a battle-scarred veteran with more than 200,000 miles on the clock, like mine - can be a labour-intensive business, especially running on waste oil. Twice a month, I have to lug several 20-litre containers up from my local's cellar before dropping them in the car boot. Back home, the oil is decanted into a 200-litre plastic tub kept in my cellar via two five-micron sock filters, which handily keeps the fried onions and chicken wings out of the car's fuel tank. (Another restaurant that I rapidly weaned myself off offered me plastic tubs full of gelatinous pieces of meat run aground in their own fat. Unusable.) This vegetable oil is then pumped into 10-litre containers and finally poured direct into the car's fuel tank via a plastic funnel. Simple enough, though time consuming.

Overall, then, is it worth going veggy? The answer has to be a highly qualified "yes". If you can't face running on waste oil, the cost savings on new veggy oil aren't nearly as attractive. When I converted, vegetable oil from Tesco cost 45p a litre, a figure that has now more than doubled. Running your car on new oil is also pretty ruinous for the environment.

If you are determined to go the waste oil route, prepare to get your hands greasy changing fuel filters regularly and expect teething problems, not to mention some disgusting decanting experiences. Most modern diesel engines are direct injection units and generally will not thank you for running on waste oil. A TDI, TDCI or HDI moniker on the back of your boot generally denotes direct injection. However, most older diesel Mercs, VWs and some Renaults/Peugeots/Citroëns should be fine as long as long as - and this is crucial - the engine is an indirect injection unit. So do your research carefully.

Running on waste veg is increasingly coming under threat from biofuel companies keen to collect previously unwanted old vegetable oil and turn it into healthy biodiesel profits. So you may have competition, not to mention from other people, also driving on fat. Try schools and old people's homes, which also are likely to change their oil regularly. For the moment, it's still possible to turn yourself into an oil baron.

Oiling the legal wheels

• Have you tried running your car on vegetable oil? Share your experiences by writing to Cash, The Observer, Kings Place, 90 York Way, London N1 9GU, or email us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

• To stay on the right side of the law, you need to complete a waste transfer note from the Environment Agency (there's a template at environment-agency.gov.uk) when you collect waste oil. But don't overdo it; if you collect more than 2,500 litres a year, you'll be liable to pay duty on all of it.

• The website vegetableoildiesel.co.uk is a hugely helpful resource, particularly the discussion board. Biotuning.co.uk is another useful site.

• Be careful how and where you dispose of empty vegetable oil containers; check with your local tip that they will take your "empties".

Tesco is likely to face fresh questions about its strategy next week as it reveals sales growth figures that trail those of its biggest rivals.

The UK's biggest supermarket is expected to report like-for-like sales growth over the past three months - excluding fuel and VAT - of some 4.3%.

Its growth is ahead of the final quarter of its last financial year, but barely half that of rivals Asda and Morrisons, which recently unveiled growth of 8.4% and 8.2% respectively. More up-to-date figures released by Asda's parent group Wal-Mart last week revealed weekly sales at the chain were ahead 12.5%.Sainsbury's, which unveils its first quarter trading update a day after Tesco, is also outstripping the market leader. It is expected to show growth of around 7%.

Tesco's growth has been hit by its introduction of cheaper brands aimed at halting the flood of bargain-hunting customers to heavy discounters like Lidl and Aldi, and frozen food stores like Iceland, which on Friday reported like-for-like annual sales growth of 16%.

Tesco, and some analysts, argue that the strategy has been successful because it has stemmed its losses in customer traffic. But the lower-price items have affected growth in revenues and Tesco's market share by value.

Sainsbury's, according to analysts at RBS, is "in good shape" - largely because it is no longer viewed as an expensive place to shop and is winning customers from Waitrose and Marks & Spencer.

"We believe Sainsbury's management has made significant progress on its value-for-money perception by lowering prices, sharpening its promotional offers and managing its range," RBS said. "In our view, this has helped it to retain shoppers during the tighter macro environment as well as gain new shoppers, in particular from the premium retailers."

Tesco has also been hit by the higher proportion of its sales that come from non-food goods, such as fashion, where shoppers have reined back spending. Tesco's boss Sir Terry Leahy said the group's smaller convenience stores were performing better than its superstores - a change he put down to shoppers avoiding stores where they might be tempted to buy more than just essential foods.

Heir hunters race against time - and each other - to find beneficiaries of a deceased person's estate and secure their finder's fee. Nic Cicutti reports

It could almost be a plot straight out of a Charles Dickens novel. One minute you are leading your normal, everyday life, the next minute a letter drops through your front door, saying you have inherited part of an estate from a distant relative you've probably never even heard of.

For thousands of people every year, this is not fiction. The letters they receive may come either from solicitors handling the deceased person's estate, or from heir hunters, who specialise in tracking down missing family members.

An estimated annual £85m is shared out this way, from the 300,000 estates where the deceased dies without leaving a will. Although the typical sums involved are not large, for a few individuals they can run to hundreds of thousands of pounds.

Along the way, they may come into contact with one or more of several dozen teams of professional probate genealogists - the heir hunters - whose livelihood depends on being able to hunt down survivors of the deceased's family and sign them up quickly to maximise any commission-earning potential.

The largest, Fraser & Fraser, founded in the 1920s and still family owned, has more than 50 staff, plus former police officers tasked with obtaining any birth or other personal details of potential inheritors at a moment's notice. Neil Fraser, a partner in the firm, says: "We have access to information and skills that can save solicitors many hours in tracing individuals."

Other hunters include Kin, a London firm with 30 staff plus its own network of former CID officers. Kin lays claim to reuniting several million pounds a year with legitimate owners.

For those contacted, the experience can be unsettling at first. Caroline Clayton, a social worker in Hampshire, was contacted recently by Kin. "The letter freaked me out a bit ," she says.

"They had all my personal details so my first thought was that this was a scam. I rang my sister Ann and when I discovered she hadn't received a letter, I became more suspicious. In the end I did call and they seemed genuine."

In their case, a distant relation has left an estate worth about £70,000. However, solicitors' fees and the 15% commission payable to Kin for tracing them, means the amount they and their other relatives will inherit is likely to run to a few thousand pounds each, at most.

Matthew Siddell, managing director at Kin, says most of his firm's business come from solicitors trying to track down surviving next of kin on behalf of local authorities, who want to find out who has inherited estate. However, about 15% of Kin's work involves trawling through lists published each week by a special division in the Treasury Solicitor's office. The unit is Bona Vacantia, the legal name for ownerless property that passes to the Crown.

Professional genealogists such as Kin, Fraser & Fraser and other firms that operate in the sector pick out cases where an estate may be worth significant amounts and then go hunting for surviving relatives.

Payouts are based on a strict order set out by law, with the surviving spouse first in line, followed by any children or their descendents, then the parents, brothers and sisters, half-brothers, grandparents, aunts and uncles and - if no one can be traced - the Crown.

One drawback is that the system is unregulated and relies on the integrity of the individual firm doing the background research. Siddell accepts this can be a problem, but adds: "We do operate mostly under the control of solicitors who are themselves regulated by the Law Society."

Meanwhile Clayton, and other beneficiaries like her, are set to enjoy windfalls they would otherwise have known nothing about. "The amount we receive won't be life-changing but it will be interesting to learn more about our family history," she says.

"You think you know all about your ancestors, so when something like this happens it is very intriguing."

How to be your own 'gene detective'

Finding out if you have inherited something from a person you didn't know is not impossible, but it will be hard and may seem callous. Here is what you need to do:

• Create an extensive family tree on your mother and father's side. Go back at least two generations. Identify those who have no immediate family - they are most likely to have left no will.

• Check the Bona Vacantia website (bonavacantia.gov.uk) of the Treasury Solicitor. You can go through a list of estates every Thursday and back-records, with the name of the deceased person, where they died and when.

• If you identify someone to whom you believe you are related, complete an online application form on the Bona Vacantia site. Give details from your family tree showing the relevant connection that might entitle you to a share of the estate. You will need, in due course, to supply certificates and documents of identification to support your claim.

• In most cases the claim will become statute barred 12 years after the date that the administration of the estate is substantially completed. The Treasury Solicitor operates a discretionary policy whereby claims may be admitted up to 30 years from the date of death.

Oil on troubled markets

Analysts at Dutch bank ING fear that the stockmarket is about to tumble. As always, the trick is to hold your nerve for the next rally and invest in stocks with defensive qualities. Among the pick of ING's crop is the oil group BP. The company should be cushioned by the relatively strong oil price, and bolstered by cost-cutting measures that have been implemented over the past 12 months. Buy up to 565p.

Open door at Travelodge

Rumours are resurfacing that Travelodge, owned by Dubai Investment Capital, is on the auction block again, 15 months after DIC failed to persuade Whitbread to take it over for £900m. Time has shown that Whitbread was wise to walk, because the business is worth nothing approaching that figure today. DIC would be lucky to get half the £625m that it paid to acquire Travelodge from Permira in 2006. But a deal still makes sense, especially at a time when the hotels industry is being poleaxed by recession. As one banker said: "A merger would put together two strong brands and create the best budget hotels operator in Europe. What are they waiting for?"

Rusal needs rescuing

The Russian newspapers report that prime minister Vladimir Putin's relationship with the Russian oligarch Oleg Deripaska, pictured, has cooled of late. But how much distance can Putin put between the Russian state and Deripaska? Deripaska's metals company Rusal is struggling to keep itself afloat. If Putin withdraws support, both financial and political, the aluminium producer will be left to the mercy of its creditors, which are largely foreign banks such as Citigroup of the US and Mizuho of Japan. Putin can only go so far.

Time to NAB a bargain

National Australia Bank, owner of the Clydesdale and Yorkshire banks, has had a reasonable credit crunch and now it wants to expand its interests. Struggling British building societies, such as West Bromwich, are top of its shopping list. Expect a move soon.

Here one minute, gone the next. That's what seems to have happened to my M&S Advantage Cash Isa interest rate. I only signed up around the start of the new tax year on the basis that it offered one of the best interest rates around. But now the bank has cut the rate from 3.1% to 2.5%.

It is by no means the first Isa provider to make such a move. As we reported in Cash last week, Barclays, Halifax, NatWest and First Direct have all been at it, chopping or pulling their deals. But that doesn't stop the move being an irritation, especially as the M&S Isa was one of the few that seemingly didn't come with a big catch, such as having to sign up to a current account.

So what is going on? Interest rates haven't fallen again yet savings providers are cutting what their accounts pay. M&S tells me it had to do the dirty because in the past week it has had a huge increase in the volume of subscribers thanks to Barclays et al cutting their rates in previous weeks. This will be of little comfort to existing savers with the bank. Cynics may also suggest some providers were offering higher rates for the first few weeks of the new tax year, knowing full well they would cut them as soon as lots of people had signed up.

It is now impossible to get an interest rate of above 3% for your cash Isa unless you are prepared to lock away your money for at least a year. For the first time in a long while, the rates offered on savings accounts are now equal or better than those on cash Isas - though of course you don't get the benefit of your money being tax-free.

So what to do? In my case, nothing. While there are fractionally better rates out there - Intelligent Finance has just launched a no-catches cash Isa paying 2.75% - the extra quarter percentage point hardly seems worth the effort of shifting my money. While the move from Principality to M&S was a smooth one for me, we are still getting letters from readers irked by how long their Isa transfer has taken or how many problems it has involved. Last year this was such an issue we ran a campaign calling for a change to the system on Isa transfers. Some progress has been made since then but the problems are far from over and the lower rates now available will do little to encourage people to move.

Come the autumn, though base rates are unlikely to have moved up, we can expect to see some better rates around as the Isa limit increases for the over-50s from £3,600 to £5,100, which will again concentrate people's minds on their savings. Until then, it's time for a punt on the stockmarket for my money.

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Poor private equity partners. Poor hedge fund managers. Poor, poor bankers. They are scared that a weakened Gordon Brown might be unable or unwilling to defend them against new European regulation that threatens to curb their activities.

The front page billing given to their concerns in the Financial Times was indeed frightening, but not for the reasons we were meant to think. The truly terrifying thing is how quickly a supposedly chastened City, having led us to the brink of ruin, is back to its old ways: to wit, demanding freedom from irksome rulebooks while still expecting taxpayers to pick up its bills.

Momentum for reforming the financial sector and for rebalancing the UK economy was strong in the depths of the crisis. Now it is palpably slipping away.

Look at the straws in the wind. First, the absence of outrage at the £22m Bob Diamond, Barclays' top investment banker, will make from the sale of the bank's fund management arm, BGI. True, Barclays has not been bailed out by the Treasury, but the nationalisation of its rivals means it is implicitly underwritten by the UK taxpayer. In that context, Diamond's windfall is distasteful.

Second, the way the Obama administration in the US, which still has plenty of wind in its sails, stepped back from radical moves to downsize pay packages on Wall Street, opting instead for modest improvements to corporate governance. This comes as banks such as Goldman Sachs and JP Morgan Chase are extricating themselves from the Tarp bailout scheme and so regaining control over their bonus policies.

The credit crunch led to a recognition of the need for a deep rethink of the Anglo-Saxon capitalist model. We are, however, in danger of missing the moment as the City takes advantage of political disarray to regroup. The belief of the resurgent financial sector, as another FT headline puts it, is that the market is confounding the left. Tentative suggestions that the recession is already over only strengthen the currents pulling us back towards business as usual.

Perhaps there is an economists' recovery, but we are a long way from an employees' recovery, a pensioners' recovery or a first-time buyers' recovery. One senior bank executive this weekend told me that, in his view, the pain in the real economy is just beginning, with large numbers of job losses yet to come, and that the need for reform remains pressing.

Yet on the slenderest of pretexts, the impetus for change is in danger of ebbing away. That is despite the most catastrophic banking failure in history - despite the fact that it will cost us, our children and possibly our grandchildren billions to pay for the damage.

Even if Brown were in a stronger position, he has never had the heart for a confrontation with the City. His underlying thinking has been that the UK has a competitive advantage in financial services, so we must encourage the practitioners: no one was asking whether their activities were desirable. By that logic, the government should foster other areas where we have an edge on our rivals: teen pregnancies, perhaps, or the production of young people without education or skills.

For all the noises made by the shadow chancellor, George Osborne, the Conservatives are unlikely to take on the City either, and politicians of all stripes have lost the moral high ground because of the MPs' expenses scandal.

The G8 finance ministers' meeting this weekend will also consider a raft of new regulation: I agree with the critics that much of it is likely to be harmful - not because it will rein them in, but because it won't. New rules risk adding bureaucracy without addressing the issue of what we want the financial sector to achieve for society.

Instead of leaving the basic set-up unchanged, but with a few more regulatory boxes to tick, policymakers need to be bold. There should be a proper debate about a form of Glass-Steagall Act to separate "casino banks", which would have no recourse to the public purse if they run into trouble, from financial utilities, which would continue to be backed by taxpayers. There should be dynamic provisioning, so that banks are compelled to build capital cushions in the good times. Another idea is a levy on the sector to cover taxpayers against the risk they will have to bail out banks in the future.

But the point is less about the specific measures than about the need to change the culture. Regulation is only one of the three 'R's needed to change the City: the other two, responsibility and relationships with clients, are just as important. Tellingly, firms that stuck to old-style relationship banking, such as JP Morgan Cazenove, came out relatively well.

It is true to say the disgust with the financial sector has not been a triumph for the left; in fact, exacerbated by the expenses scandal, it has translated into gains for the far right. But that is another argument for moving away from a model that left so many working-class people excluded from prosperity, not for allowing financiers to go back to their old ways.

What we saw in the run-up to the crunch was a perversion of capitalism, a breakdown of integrity and a reckless disregard for ethics. The case for reform is not based on a leftist desire to bring down capitalism, which, for all its flaws, I believe to be the best way of delivering prosperity; it is about reclaiming it.

With the domestic holiday market booming again, Huma Qureshi asks if now is the time to take the plunge into the accommodation business

In pictures: B&Bs for sale from Cornwall to Cumbria

With more Britons choosing to take their holidays in the UK this year, bed-and-breakfast owners across the country are being run off their feet preparing for a flurry of guests as the summer season gets under way.

So with many people sitting on voluntary redundancy payouts and aspiring to a lifestyle change, could this be the ideal time to quit the rat race, move to the country and set up that dream B&B?

David Weston, chairman of the Bed and Breakfast Association, is confident that his sector is about to enjoy a good summer. "But starting a B&B is not something to go into lightly," he adds. "There's an awful lot to think about and plenty of regulations to comply with. That said, if you are a people person and have the right property, it could work exceptionally well for you."

Over the last 10 years, the humble B&B has slowly been dipping into the luxury market. There are still plenty of cheap and practical B&Bs around, but there are increasing numbers of "boutique" ones aimed at the sort of holidaymaker who views accommodation not just as just a bed for the night, but as part of a holiday experience.

Breakfasts, say B&B owners, are key to winning guests and clinching bookings. "That's where you can really stand out against hotels," says Weston.

Bertie Lamb, who runs the Long Puddle B&B in Dorset, where he lives with his wife, says there is undoubtedly "a charm" to waking up to a home-cooked breakfast.

"If you don't skimp on basics like ingredients and sheets, and if you always provide the best quality you can, then your guests will appreciate it. They will remember a personal, enjoyable stay, and more often than not they will make a booking to come back the following year," says Lamb.

His recipe for success seems to be working - his bookings have doubled this year compared to last and the summer is already looking good, with all of his three rooms fully booked for weeks. Rooms at Long Puddle cost £70 a night for two people in peak season. When every room is taken, Lamb can make £210 a night or £1,470 a week.

How to buy

It is possible to buy a B&B and move straight in, effectively taking over an established business and getting a new home at the same time.

"When you're looking at buying a B&B, you need to find a happy medium and find somewhere you can live as well as make money from," says Matthew Dixon, a director at Lake District estate agents Matthews Benjamin. "You need to think about views, location, parking and space and, if you are serious about it, the vendor will then disclose the business financials so you can know how well it has been doing."

Currently for sale at Matthews Benjamin is the Waterwheel Guesthouse, a pretty B&B in Ambleside. It is available leasehold for £180,000 and has three rooms for guests and one for the owner. They also have a three-star B&B with seven bedrooms and five bathrooms available for £485,000.

But you don't have to buy a ready-made B&B; an attractive residential property in the right location can easily draw in paying guests for weekends and short breaks - although you must ensure that you comply with health and safety legislation (see box on the right).

The practicalities

Whether you convert your existing home into a B&B or buy a residential property for the purpose, you must tell your mortgage lender. "Once your residential property becomes your business premises and you start using the property to generate an income, you may find your lender will advise you to switch to a commercial mortgage," says David Hollingworth of mortgage brokers London & Country.

If you are converting your family home into a small B&B, you don't necessarily have to change your home insurance policy, but you will have to inform your insurer and let them know the guest capacity and provide a fire certificate if they ask for it. Larger B&Bs will need to apply for a business insurance policy.

Ultimately, you need space - and lots of it - to make sure your guests will have a comfortable stay. Weston, who lives in Dorset, turned his home, The Pheasants in Sherborne, into a part-B&B five years ago. "It is a big old townhouse with a lot more room than we need, so we decided to give it a try," he says.

The three-storey house is now split into three B&B guest rooms and four bedrooms for Weston, his wife and two children. "We can share the house with our guests, but still have our own space and privacy."

Lamb and his wife also have three guest rooms in their own home: "Three rooms are more than enough - in busy months we can be a full house and mornings are busy, but most guests go out after breakfast so you have the house to yourself after that."

Full-time or part-time?

For 60-year-old Lamb, a former Navy man, running a B&B can be hard work but it has provided him with his dream lifestyle. A typical day starts at 6am, making full English breakfasts, then it's bed-making and cleaning. "There are days when the lawnmower has broken down and the phone is ringing off the hook," he admits, "but the great thing is that we are making all our own decisions about running the place; we have our independence.

"If we get too tired and we want a break of our own, then we won't take any bookings for that week - simple."

But for others, running a B&B is a full-time job. Nick Davis and his wife Barbara converted Incleborough House, a grade II-listed property, into a luxury bed-and-breakfast two years ago. There are four double rooms for guests and the couple live in the other side of the house. They work seven days a week - every day involves three hours preparing breakfast, followed by cleaning rooms, gardening, maintenance and preparing fresh afternoon tea. Each evening ends with baking bread for the following morning. Is it all worth it?

"It can be as relentless as running a marathon, but we are dedicated to it," says Davis. "We enjoy what we do and get great satisfaction when people come back regularly. It's not necessarily been a slower pace of life for us, but it's rewarding making guests feel comfortable."

Ticking the B&B boxes

• Planning permission Even if you only wish to offer simple bed and breakfast in your home, with no need for structural alterations to the property, you may need "change of use" planning permission.

• Food You must comply with food safety legislation. Start by completing a simple form that you can get from the environmental health department of your local authority.

• Fire safety A "suitable and sufficient" fire-risk assessment must be carried out, and if there are five or more employees, the assessment should be recorded. One person should be made responsible for the assessment and for ensuring that protection and prevention measures are observed and maintained.

• Insurance Under the Employers' Liability (Compulsory Insurance) Act 1969, employers must have insurance to cover their liability for any harm suffered by an employee at work. You should also consider public liability insurance.

• Gas safety You will need to have an inspection done by a Gas Safe (previously Corgi) registered engineer and display the certificate somewhere where guests can see it.

• TV licence You will need a "hotel and mobile units television licence" (a hotel licence). For up to 15 TVs, the fee is £142.50.

Source: accommodationknowhow.co.uk

From Cornwall to Cumbria: Five ways to buy into the British holiday boom

Goonearl Cottage
Wheal Rose, Cornwall

With nine bedrooms (six en suite), a three-bedroom annexe, owners' accommodation and a two-bedroom static caravan, this cottage also boasts country views and a licensed bar. For sale with reservations already booked.

• £795,000 from Stratton Creber Coastal & Country Homes (01872 240999).

Beach End
Seaton, Devon

An Edwardian B&B with spectacular sea views from three first-floor en suite bedrooms. The owners' accommodation is on the top floor. There is also a roomy kitchen equipped with an Aga to prepare the guests' breakfasts.

• Offers in excess of £550,000 to Fulfords Country & Waterside (01392 660007).

Craig Walk
Bowness-on-Windermere, Cumbria

A traditional four-bedroom Lakeland stone house with a lower ground floor annex suitable for B&B guests. The annex has its own patio entrance, bedroom, kitchen and bathroom, which would suit couples on weekends away.

• £329,500 from Hackney & Leigh (015394 44461).

Chateaubriand
Burwash, East Sussex

A grade II-listed property in a village that boasts the Who's Roger Daltrey among the neighbours. It currently doubles as a B&B and antiques shop. It has a self-contained annex downstairs and a guest bedroom on the top floor with its own lounge.

• £675,000 from Freeman Forman Burwash (01435 883800).

The Mill House
North Newington, Oxfordshire

An AA four-star property with four one-bedroom holiday cottages in the grounds and three en suite guest bedrooms in the house, plus three bedrooms for the owners. The cottages alone generate £285 to £425 a week in rent.

• £1.1m from Strutt & Parker's Banbury office (01295 273592).

British hotels are grappling with the worst trading conditions for 30 years with room rates plummeting and operators slashing prices to attract customers, according to the latest research by accountants PricewaterhouseCoopers.

Whitbread, the leisure company, is due to update investors this week amid fears that its budget chain Premier Inn is being hit hard by the slump.

PwC warns that some of the weaker hotel groups could fail as British firms continue to cut corporate hospitality budgets. Robert Milburn, a partner at PwC, says: "The climate is worse than in the period after 9/11 and we are now roughly where we were in the early 1990s recession. But our forecast is that there is worse to come."

The accountancy firm expects average UK room rates to fall 10% to just £78 a night in 2009, but that figure disguises the fact that some sectors are facing far worse conditions. At airport hotels, the figure is closer to 20%, and marginally worse in cities such as Manchester and Liverpool, where joblessness is soaring.

Outside London, occupancy rates are expected to fall by 13% to 63% in 2009. In the capital, room rates have fallen by 6% to £100, but are expected to slide by a total of 10% by the end of 2009.

According to PwC, the damage looks more severe when price-cutting is taken into account: using a key industry metric, average revenue per available room , PwC is forecasting a national decline of nearly 19%, the worst since its records began in 1980.

Estate agents are finding buyers at last. Now they need something to sell, says Kathryn Hopkins

'All I want is a happy balance," says David McKillop of independent estate agents McKillop & Gregory in Salisbury, Wiltshire.

Last year, his problem was that too many people wanted to sell their homes but there were no buyers walking through the door, as banks tightened lending conditions. This time, however, the tables have turned. "There are no shortage of buyers. My worry is there's a shortage of instructions," he says. "People are sitting on the fence. I wish I knew why."

First-time buyers are "back in force" as their parents are helping them with deposits, claims McKillop. He also says buy-to-let investors are coming back, which has led to an increase in sales at the bottom end of the market. "In the last three months sales have exceeded last year, but instructions are bad. More people were selling last year but prices were inflated."

McKillop says the lack of instructions has slowed business down: "We have some very good buyers at present, but they cannot find anything."

He believes Home Information Packs (Hips) have deterred some people from testing the market because of the cost and extra hassle. "Nobody wants to look at them or read them."

In general though, he believes things are looking up for the housing market. "I'm much happier now," he says. "The financial situation has settled down. Last year, we kept being hit by more bad news and that hit people's confidence. People are more confident now."

Keith Spencer at Newland Rennie Wilkins in Abergavenny in Wales is having the same problem as McKillop. He says there is a "reasonable level of buyer inquiry, but lack of new instructions, especially given that this should be the busy time of year. Prevailing sentiment is that it is not a good time to be selling, and lack of confidence of vendors in their employment position means that they are not looking to trade up."

As for house prices, Spencer believes it is rather early to say that they have reached a bottom. "At the moment there are transactions taking place. I think it's too soon to say that prices are rising, but we are now at a point where we have two or more people competing for the same property.

"People are increasing their bids, but they are still not paying as much as the asking price. Few properties are making more than the asking price."

He is now worried about the lack of new stock coming onto the market. For Newland Rennie Wilkins, June is traditionally a month where a "flood" of properties are put up for sale, but so far they have only had a "steady trickle".

Chris Baker, director of Cambridge-based estate agents Pocock and Shaw, said he also has very little stock coming on to the market, which has created a "vacuum". "People who sold over the last few months, and rented instead of buying, are now keen to get back into the market."

Baker believes a lot of people now reckon the market has bottomed out and "don't want to miss the boat", but that stock levels have been depleted and there is not enough choice. Nonetheless, he believes the housing market is now in a much better state than it was a year ago. "If a house is priced correctly, we are back to the market of two or three years ago. We are making more sales but we just need more houses to sell."

Michael Fisher, of estate agents Fisher and Wrathall in Lancaster, says that there has certainly been quite an increase in buyer interest, but he too believes that it is too soon to call a recovery in the housing market.

"I'm fairly cautious because of a few issues on the horizon, such as the imminent likelihood of an increase in mortgage rates.

"I also have a lot of concern that because agents have seen their stock of property go down over the last few months, there's a temptation for agents to talk the market up again.

"Sales have lifted up again, marginally, but we have to see this in the context that we're still in the national average of sales down by 66%. So the fact that we sold two more houses this week is fine - but we're still more than 50% down."

Fisher says his agency is seeing more houses going out than coming in and believes this is an early indicator that there will be a shortage over the next few months. He also says that Hips are putting off less-committed would-be sellers from entering the market. "If you are going to pay £350 or whatever it is for a Hip, then you've got to be serious."

After HBOS crashed, Andy Hornby became a hate figure. Now he wants to rebuild his career and reputation back in retail, he tells David Teather

It ranks as one of the most remarkable comebacks in UK business - the appointment of Andy Hornby to run Alliance Boots nine months after losing his grip on the banking group HBOS in such spectacular fashion.

Supporters of the former wunderkind of the corporate world like to portray him as a victim of circumstance, caught up in the eddies of world events and of a broken system that forgot banking was about more than marketing. He deserves a second chance, they say.

Others, viewing him through the prism of the banking crisis that pitched the world into recession, see only another example of a well-rewarded executive finding a comfortable job with a salary of about £800,000 a year and nary a backward glance at the damage he has left behind. For them, he has accepted the job at Alliance Boots with indecent haste, like a divorcee rushing down the aisle again before the ink has dried on the legal papers.

Either way, it is an astonishing testament to the self-confidence of a man still only 42, whip-thin and boyish, who has managed to shake off the humiliation of a public grilling over his failure at HBOS and being pilloried by investors, the public and commentators alike. In a vituperative assault last week, the Daily Mail described Hornby's rehabilitation as "an affront" to taxpayers forced to support the takeover of HBOS by Lloyds and suggested that bank executives "should hang their heads in shame".

Hornby is "very excited" about his new role and getting back into a routine after talking to a "range of people" about jobs. He had been approached by Boots six years ago and the retailer had the added allure of being a privately owned company: "The sector's good and it's a plus for me that is out of the limelight."

The youngest of five and the son of a headmaster, Hornby had not been accustomed to things going badly. He studied English at Oxford and took the traditional route of ambitious young guns, spending three years with the Boston Consulting Group, then doing an MBA at Harvard, where he came top of his class of 800. He was a protege of Archie Norman at Asda and joined the Halifax in 1999 to run the retail business.

Shortly after he joined Halifax, he was asked if he wanted the top job. "Gosh, I really don't know," he said, before adding: "I'd be surprised if in 10 to 15 years' time, I'm not running something. Running something big." He didn't have to wait that long: he was given the top job of the combined Halifax/Bank of Scotland group in 2006 at 39, one of the youngest chief executives in the top flight of UK companies. "Andy Hornby is a superstar," said breathless analysts at Dresdner Kleinwort.

Norman says age has never been an issue for Hornby: "He doesn't think of himself as the youngest person in the room. He has a lively intelligence and one he wears lightly." In 1991, Hornby married Catherine, another Harvard alumna whom he met at Oxford, and they have a son and a daughter.

He was firmly from the Asda school of management, where senior executives wore George clothes on Fridays, shops were called "theatres" and bosses would wear a baseball cap if they didn't want to be disturbed.

He brought the same kind of light touch to the Halifax, stripping out carpets in branches, personally choosing the piped music and using staff, or "colleagues" as he would call them, in the advertising, making a star of singing bank clerk Howard Brown. He also introduced "Ask Andy" sessions, to answer staff questions. It all made him terribly popular. Ged Nichols, who runs the Accord union, confounds expectations and says he bears Hornby no malice: "He was a good leader and very open to the unions. Whether he had the breadth of vision to take on the bigger job is for others to judge."

Critics argue that his marketing bons mots counted for little when he was made chief executive and faced a far more complex banking business and issues of capital markets and risk. He took over at the peak of the market - with HBOS shares at an all-time high and a property boom in full steam - and inherited an apparently successful business model. The Achilles heel was the corporate lending division under Peter Cummings, which invested heavily in property, and which Hornby privately admits he failed to get a grip on. When the market turned, HBOS lost almost £11bn.

At the Treasury select committee hearings, he appeared lost and broken, his apology oddly anaemic. "We are extremely sorry for the turn of events," he said, adding that he did not feel "personally culpable".

Hornby, who turned down a £1m severance package from HBOS, describes the events of the past year as "very, very" tough. "It's been tough for the family and tough for everyone. It made me all the more determined to make sure that I got the next phase right and found the right thing. I worked really hard to do that.

"I've been very clear. It's a very complex situation and an awful lot of different things came together, but I'm not ducking my own responsibility. I wanted to do the right thing for the company." Hence the deal with Lloyds? "It was important and, by the way, at every stage you are trying to do the right thing for 70,000 people in terms of a long-term outlook. I would never trivialise what has happened. It has been monumental for the whole banking system and the important thing is that everyone needs to learn from what has happened."

Supporters say he worked tirelessly to get a good deal from Lloyds, with little back-up from his chairman or directors. "I think it got very hard for him. Not clinical depression, but he was having very little sleep, he was working seven days a week and didn't have the support or people to talk to," Norman says.

Peter Hahn at the Cass Business School, also a former banker, says Hornby is a "good catch" for Boots, praising his retail skills. "He didn't hire himself at HBOS. The board did, and no one would have turned that job down. The reality is they thought they were a retailer and forgot they were a bank. Boards weren't in charge. They were hiring the wrong people, going for unchecked growth. At HBOS there were serious problems and strategies that caused problems before Andy's time.

"He is not completely innocent; he didn't say 'What, are we nuts? We should stop this', and he was there at the end of it. But by the time Andy Hornby took over, everyone's foot was so firmly on the pedal, no one even knew where the brake was any more."

Norman says Hornby will bounce back. "Things went right and things went wrong, but he has a life to lead. If we threw away everyone who was in the wrong place at the wrong time, we'd lose a lot of talent.

"If he was at the end of his career, he might feel differently about things. But he is a young guy, he is not warped by what has happened, he has been through this and now he has got a lot to prove. And that will be a big motivator for him - to prove people wrong."

The CV

Name Andrew Hornby

Born January 1967, Bristol

Education Clifton College; St Peter's College, Oxford (English degree); Harvard Business School (MBA)

Career: Boston Consulting Group; Blue Circle Home Products (1993-95); Asda, latterly managing director of the George clothing business (1996-99); Halifax, chief executive of retail division (1999-2005); HBOS, chief operating officer (2005-06); HBOS, chief executive (2006-09); Alliance Boots, chief executive (2009-)

Family Married with two children.

However house prices may be moving, a new generation is signalling an end to Britain's passion for property

Talk that the housing market may be bottoming out after 18 months of falling prices may cheer the chattering classes of existing homeowners, but for young people it is no cause for celebration.

Jonny Scott, aged 24, from Winchester, says that one day he would like to buy a house or a flat but, despite a 20% drop in prices across the country, that still "seems millions of years away. I don't even see it as a possibility at the moment".

He adds that he cannot see himself getting on to the property ladder for at least another 10 to 15 years: "I kind of hope by 35 there will be a child or two in the equation, but that might have to come before I'm able to buy a house."

Jack Mitchell, 24, doing temporary work in Surrey after graduating from Birmingham University, is not even considering buying at the moment because it is just not "viable", adding : "I don't know anyone my age who owns a house."

Bianca Gill, 22, from London has moved back in with her father because she believes having fewer outgoings will allow her to find a job with fewer hours, so she has more time to look for jobs in her chosen field. "It's difficult because I've lived by myself for a few years, but the prospect of buying a house is so far away."

These are by no means isolated cases and may reveal that Britain's love affair with property is gradually fading. Research from the Chartered Institute of Housing out tomorrow will show that only a third of young people (18-to-24s) now aspire to own their own home. There has also been a big change in attitudes among the 25-to-34 age group; only 69% think home ownership is a good thing, down from 83% before the credit crunch struck.

CIH chief executive Sarah Webb says: "We've driven too many people into unsustainable owner-occupation and need to do a far better job of putting renting and owning on a level playing field. We need to get serious about the number of houses we are prepared to build and have to look at renting as a more attractive alternative to owning."

Evidence from the front line is that the stabilisation in the housing market is not driven by young people: the fall in prices so far has done little to help them gain a foothold on the housing ladder.

Julia Lodge, sales manager at estate agents Barnard Marcus in Hammersmith, west London, says first-time buyers are still struggling to get mortgages: "Most of our buyers are either cash or European buyers. There are first-time buyers looking, but the vast majority of them are getting help from their parents. There are hardly any that can do it on their own any more."

For buyers wielding sacks of euros, the UK market must now seem really cheap given the 20% fall in prices from the peak and the fact that the pound is down so far against the euro over the past year. The British raids on the French and Spanish property market of recent years, fuelled by the strong pound, seem to have gone into reverse.

Lodge says the London market, which often leads the rest of the country, has really turned around and she is run off her feet. "Last year was terrible, but now it's very exciting. I wouldn't say prices are heading up yet, but activity has really improved."

Her experience is mirrored across Britain, although often less strongly than in London, according the recent monthly survey from the Royal Institution of Chartered Surveyors. It showed buyer inquiries at their highest for 10 years.

Property website Rightmove enjoyed its busiest day ever recently and said that asking prices in May showed the largest rise since records began in 2003, and, after many months of sharp declines, both the Nationwide and Halifax monthly surveys suggested prices rose strongly last month.

Given that the Bank of England cut interest rates to an all-time low of just 0.5% over the winter, perhaps a levelling out of the housing market should not be a surprise. So does that mean the end of the slump is upon us? Can the "good" times of rising prices be about to return? The picture is somewhat confusing, but experts advise caution on assuming the slump is over.

"We are certainly not talking the market up," says Simon Rubinsohn, RICS chief economist, who thinks prices may still have further to fall. "There are still plenty of headwinds against it, such as the fact that first-time buyers still find it difficult to get a mortgage and job losses are still rising rapidly."

The problem most agents report is that there is too little property on offer. The RICS survey shows that the number of houses and flats has shrunk by a third over the past year, probably as sellers unable to find buyers in the depths of last year's market meltdown have let their property instead. Lettings surveys show there has been a big increase in supply of rentals, with a resultant downward pressure on rents.

Rightmove's survey also recorded the lowest number of new properties coming on to the market during May. Professor Steve Nickell, a former member of the Bank of England's monetary policy committee and now chairman of the National Housing Planning and Advice Unit, is puzzled that house prices seem to be bottoming out given that first-time buyer access to mortgages on reasonable terms is restricted by a still dysfunctional banking system.

"The market does look to be bottoming out, and if the mortgage market loosens up then prices will go up again. If it doesn't loosen up, then prices will just be flat for a long time," he says.

It is true that new mortgage approvals - a good indicator of where prices will be in a few months - have been picking up in the recent months. But figures from the Council of Mortgage Lenders last week showed approvals in April rose 16% from March to 35,600. That sounds impressive, but the figure was 28% below last April's already depressed level and 60% below the 88,000 April average over the previous seven years.

"Despite the recent pick-up, mortgage activity is still down at a level that is normally associated with falling house prices," says Howard Archer, an economist at IHS Global Insight.

And last week several lenders started to raise their fixed-rate mortgage offers, for the first time in a year, in line with movements in money market interest rates.

Ray Boulger, of mortgage brokers John Charcol, says: "If interest rates continue to rise, then the current recovery in the housing market, which is based primarily on much-improved affordability as a result of a combination of lower house prices and lower interest rates, may well wobble."

Professor David Blanchflower, who recently left the Bank of England's monetary policy committee, wrote last week that we should not get carried away. "House prices still have a long way to fall. It should be remembered that during the period of declining house prices of the early 1990s, approximately one month in three house prices actually increased."

The underlying long-term picture is that there is a shortage of supply: and that means the pattern of high house prices and market booms and slumps will be hard to break.

Nickell says that the long-running shortage of housing that the British property market suffers has not gone away just because prices have slumped. "There is a shortage in the sense that not enough houses have been built to keep pace with the number of new households being formed," he adds. "And that has been the case since about 1998."

Britain's birth rate has been relatively strong, people are living longer and there is a steady flow of immigration, all of which puts upward pressure on demand. Britain is estimated to need nearly a quarter of a million new homes a year just to keep up. This year, though, experts expect fewer than 100,000 to be built - the smallest number since the second world war - as a result of the market slump.

Nickell is worried that social housing waiting lists have risen to 700,000 households since the turn of the century: "And it is continuing to rise very strongly. This is putting pressure on the private rented sector."

Britain, along with Spain, has the highest levels of owner occupancy in Europe, at something over 70%. In Germany, by contrast, only about 40% of people own their homes, although prices there have not risen in real terms for decades because of a declining population. This lack of house price inflation reduces the attraction of buying and explains why the majority of Germans rent.

But many other European countries, such as Ireland, Spain and France, as well as the United States, have seen very similar property booms this decade, driven by cheap and plentiful credit. Those markets have also bust spectacularly. But in the spring the International Monetary Fund warned that house prices were still overvalued in many countries and that the correction probably had "a considerable distance left to run".

Lack of housebuilding means Britain looks destined to live with relatively high house prices lurching from boom to bust as they have done for decades.

There are campaigners who argue that Britain should deal once and for all with its damaging boom-bust cycle in house prices by reaching for a radical policy known as annual land value tax (LVT), which would be levied on the value of land up to its maximum permitted development value.

The tax would be levied on property owners at, say, 1%, of the land's value every year, with the proceeds used to replace council tax and reduce income tax, thus rewarding work rather than property speculation. LVT would also encourage, for example, an elderly person living in a large family house to move to a flat and free the house for a family in a country where space is limited. It would also discourage developers from sitting on empty sites and buildings.

"This tax-shifting vision would release billions into the pockets of millions of working people and their families to spend and make the economy work for them and not landowners, speculators and bankers," says Louanne Tranchell, chair of the Labour Land Campaign.

LVTs are used elsewhere in the world and the idea goes back at least two centuries. "With the financial crisis, the time is ripe to introduce a system to collect the unearned income from the value of the land, which arises from community activity and services, and through investment in transport and infrastructure funded by the public purse," Tranchell adds.