Brendons Auctioneers

"As VAT increases to 20% in January, and the deficit-cutting programme moves to a higher gear in 2011, risks of a setback will inevitably worsen."

However, Ray Boulger, from mortgage broker John Charcol, said the economic outlook - and therefore any future action by the Bank - was unreadable.

"How the economy performs in 2011 as the impact of the Comprehensive Spending Review progressively bites will be a major factor in determining whether the next move on monetary policy is more easing by increasing the scale of Quantitative Easing, or tightening by increasing the Bank Rate (and perhaps reversing QE)," he said.

Recent meetings have seen growing disagreement among the Bank's Monetary Policy Committee (MPC) members over policy.

The vote at the end of the MPC's last meeting was a three-way split, minutes revealed. Seven of its members voted for no change to interest rates and no additional stimulus spending, one person wanted to see rates rise, while another member voted to see QE restart.

The minutes to this week's two-day meeting will be published on 17 November.

The lack of finance available to landlords has constrained supply and put up rents, according to recent surveys by both ARLA and the RICS. Council of Mortgage Lenders figures show that buy-to-let lending hit its lowest point since 2001 by both value and volume last year.

David Brown, commercial director of LSL Property Services, said: "It's great news for investors that Paragon has returned to the market. Demand for rental properties is high, and rents have risen for seven months in a row. But the constricted supply of cheap mortgage finance has been strangling new investment in the private rental sector.

"We are clearly still a long way from the market of two years ago, but the re-entrance of lenders like Paragon should give professional landlords hope that the lending market is beginning to loosen and that more funding is becoming available."

David Salusbury, chairman of the National Landlords Association, said: "We warmly welcomes the announcement from Paragon that it is returning to the buy-to-let lending market.

"An increase in the availability of buy-to-let mortgages will stimulate the private rented sector into playing a bigger role in providing a much-needed alternative to owner occupation during these difficult times."

There were 178 auctions in the UK.

Despite the fall in the number of properties going to auction, the overall amount raised was 11% down, suggesting higher prices being achieved at auction.

The statistics are from Essential Information Group.

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While bank finance remains an issue, 17% of investors are still able to secure bank loans to fund investment, having enough liquid assets to cover the current LTV ratio, while 32% have access to savings and are able to use the equity from existing assets.

Nick Clark, managing director of the Property Investor Show, says: "The boost in confidence and renewed hunger in UK and overseas property has been signalled by reports that UK property prices have stabilised and the first signs of permanent job rises being reported."

"Confidence drives transaction volumes, which in turn drives house prices. But with lending remaining constrained, transaction volume cannot recover as strongly as demand suggests it should, and the inability of first-time buyers to get a toehold on the housing ladder is the biggest single risk to the housing market recovery."

He added: "The record levels of traffic to Zoopla.co.uk, with over one search per second recently, is another strong indicator of the rising interest and confidence in the housing market."

Meanwhile, Badger Holdings, parent company of Townends and Regents estate agents, has reported a 30% increase in instruction numbers in the last three months compared with the second quarter of this year.

Douglas Sleaper, group sales director, said: "Many housing commentators have recognised that a large part of the impetus in rising prices has come from the chronic shortage of new stock coming to the market.

"However, comparing Q3 with Q2 we have seen a 30% increase in instruction numbers as sellers recognise that the market has improved significantly during the year, tempting them to put their home up for sale. Although figures are still of course historically low, this is a definite sign of an improvement in confidence.

"The motivation varies but we are seeing increasing numbers of 'reluctant landlords' selling their buy-to-let properties as well as other sellers who are fortunate to have enough deposit to secure a mortgage that enables them to trade up-market."

But the Bank has warned recovery will be "slow and protracted" and that it will take months for the full impact of its policies to be felt.

'Rhetoric and reality'
Most commentators said the decision to leave rates, and the approach to quantitative easing, unchanged was sensible.

"If you look at survey data, you see the signs of green shoots, but if you look at hard numbers on the real economy, green shoots are much more difficult to see" said Graeme Leach, Chief Economist at the Institute of Directors business group.

"There is a clear divergence at present between the rhetoric and reality of recovery. This situation will change, recovery will come, but just as the private sector recession ends, the public sector recession will be only just beginning."

No changes in policy were expected until at least November, said Hetal Mehta, senior economic adviser to the Ernst & Young Item Club.

"With the economy still weak and inflation projected to remain well below target for a prolonged period of time, interest rates are not heading up any time soon" she added.

Stagnation
Optimism about the outlook for the UK economy has pushed the FTSE 100 index above 5,000 points for the first time since October 2008.

Official data this week showed that UK manufacturing output rose at its fastest rate in 18 months in July.

Respected researchers the National Institute of Economic and Social Research also said the UK economy grew 0.2% in the three months to August.

But it said that a return to growth should not be confused with a "return to normal economic conditions".

"There may well be a period of stagnation now, with output rising in some months and falling in others" the institute said.

Economy boost
The aim of quantitative easing is to encourage individual banks to expand their balance sheets - moving their reserves into something that offers a higher return, such as making new loans - and so increasing the supply of money in the economy.

The BoE extended its stimulus programme to £175bn last month
The Bank's Monetary Policy Committee (MPC) last month increased the size of the the programme by £50bn to create up to £175bn on the UK's balance sheet by, in effect, printing money.

The bank cut interest rates to a record low of 0.5% in March in an attempt to boost lending in the economy.

But there have now been calls for the rates to be cut to less than zero in order to dissuade banks from holding onto the cash being pumped into the economy and lend it to individuals and companies instead.

"One must now question the conventional view that cutting rates below 0.5% will not help" said BCC chief economist David Kern.

"Persistent weakness in lending to businesses, particularly to small firms, poses serious risks to the early signs of economic recovery."

He added that "positive signs of recovery cannot obscure the risks of a relapse", and urged the rate-setters to raise the quantitative easing programme to £200bn to purchase more company debt."

"For the majority of sales, the usual methods will be suitable, but in keeping the marketing strategy under review it may be that an auction is appropriate if the seller is keen to sell and the property has been on the market for some time (the record award involved a property on the market for 12 months at least with no viewings and the client wanting to sell). Of course, an agent suggesting an auction option must make the client aware of the potential downsides as well.

"I would also point out that I do not 'fine' firms. I make awards of compensation, and there is an important distinction. Fines are imposed by a regulator, which I am not, and do not go to the complainant.

"I order payments by way of redress for aggravation, distress or inconvenience and also in respect of financial loss. These go to the complainant. In the case of the record award, I ordered a payment of £22,880 in financial recompense and a further £1,000 for the distress caused.

"The circumstances of this award were unique and could not be regarded as a general ruling and should not be taken out of their individual context. My decision does not necessarily apply to the industry as a whole.

"It is not for me to comment as to whether agents wish to join an auction co-operative, but I emphasise that I have not made a ruling that states they should or must offer auctions to their clients."