'I wish I'd never seen the place'

An average flat in London now costs around £137,000, and for many the purchase itself is only the start of the nightmare. No wonder first-time buyers are giving the capital a wide berth.

As London prices continue to rise buyers chasing their first home are having a rocky ride. With an average flat in Greater London now costing around £137,366, many would-be buyers find themselves relegated to the rental market or buying out of town. Those who do secure London homes may find that the process doesn't always run smoothly.

Clare Limpus first decided to buy back in 1998: "I thought about it for ages. I'd hit 30 so it was definitely time to sort out my life but it's scary. You look around and it's such a lot of money it's got to be just right." Clare spent months searching but found that as time passed the viewings changed: "At first I was seeing two bedroom garden flats but then it was one bedrooms without gardens. I started panicking as there was less and less on the market."

Last summer Clare, who works as a picture editor, finally found a one and a half bedroomed Victorian conversion flat in south London: "It was rundown and I thought great I've always wanted to do a place up. I knew I wasn't going to get a flat if I wasn't quick."

Clare arranged her mortgage and requested a homebuyer's survey which, highlighted minor "wear and tear" but ultimately found no major faults. She paid £70,000 for her flat, hired a builder for which she set aside £12,000 and was told that she could move in seven weeks later.

But when the builder began work on the flat's rear he uncovered a series of problems. "On the first day I went round to have a look after work and found I didn't have a back wall," says Clare. There was also a huge crack at the back but an architect friend reassured her that the Victorians used their worst materials at the backs of houses saving their best materials for the front.

The builder worked his way to the front and found more problems. The walls were rotten and needed complete replastering and the chimney stacks were dangerous and required removing. One discovery firmly contradicted her friend's assurances: "There was a very serious problem with the roof joists and the entire bay window at the front of the flat was falling off. He advised me to consult a structural engineer immediately and tell the council."

The structural engineer confirmed the flat's faults and as the flat was dangerous the work began immediately. Clare reported the problems to her surveyors to find that the surveyor responsible had left. The company's head visited and the tussle began: "They tried to deny everything. Some work had started which they said made it impossible for them to know what state the property was in before. They even said that because I'd replaced a window the original surveyor would not have been able to see the chimneys even though there was a clear view of them from the road."

After "continual correspondence" the firm eventually agreed to partially compensate Clare for the chimney work increasing their offer from £1,000 to £2,000 but so far they deny liability for the other structural problems. Clare had borrowed the maximum amount of mortgage but her lenders have been forced to extend it to partially cover the repairs, around £30,000 in total. Clare's lenders want her to pursue compensation from the surveyors and suggest getting another independent survey done. But the original firm of surveyors threaten to withdraw their offer if she does. After staying with her brother and friends for almost a year she reluctantly moved in to her flat last week: "I knew I had to even though the place feels like it's got totally bad vibes. Now I'm here it's not so bad. I know once I've got furniture I'll be happy but I wish I'd never seen the place."

Ironically Clare regrets not buying the very first property she saw: "But you think I've only seen one so it can't be right." Notting Hill agent Gordon Blausten regularly sees this scenario: "First time buyers often return a month after viewing and ask if the first place they saw is still available, but sadly it rarely is."

Clare's negative experience is enough to dissuade anyone from buying and so is the high cost of city homes, not just in London. Some cities are making efforts to redress this. Last month Birmingham saw the opening of 46 canal-side apartments by CASPAR, City Apartments for Single People at Affordable Rents. The project, developed by the Joseph Rowntree Foundation, is part of a campaign to bring new life to city centres with homes for single people on middle incomes. Richard Best, the Foundation's director, says: "City centres are increasingly places where accommodation is only available to those poor enough to secure subsidised social housing or rich enough to afford high-priced private apartments for sale. If people on middle incomes continue to shun our inner cities, these areas will face a bleak future."

The Government is also concerned with lack of choices for buyers on lower incomes, particularly in London, and last month announced its intentions to help "key workers" with low-cost home loans. But south London headteacher Peter Coleman is sceptical about the government's definition of "key worker" following his recent battle with the Department for Education and Employment (DfEE).

The DfEE had refused to extend the work permit of a teacher from New Zealand working temporarily in his school: "There is a huge crisis and the Government won't recognise that most primary schools would close if it weren't for teachers from Australia and New Zealand who are prepared to share overcrowded flats or sleep on floors."

Officials eventually relented and extended the teacher's visa but their reluctance to admit to a teacher shortage in London makes Mr Coleman question their committment to the home loan scheme: "It begs the question what is a key worker? Are teachers included? If they aren't then who is?"

Mr Coleman has lost valuable staff because of the scarcity of low-cost housing: "I pay my young teachers £16,000, which would give them mortgages of about £50,000. Around here, two-bedroom flats are in excess of £130,000." He has also seen teachers who buy but find themselves with little disposable income: "They realise that they've nothing left to do the very things that they came here for, so they leave London and very often education too."

But it is not just the public sector which is a victim of the housing boom. A personnel manager of an information research company says: 'We are increasingly finding recently qualified graduates asking to be placed anywhere but London."