An investigation by consumer watchdog Which? finds just four in 50 mortgage advisors are giving “acceptable” advice to homebuyers.

Between February and April 2008, Which? Money visited advisers in England and Scotland undercover, posing as first-time buyers who wanted advice and a recommendation.

The findings, argues the company, were disappointing.

Some 41 out of the 50 failed to provide one or more pieces of key information – which include an Initial Disclosure Document (IDD), a Key Facts Illustration (KFI), as well as making it clear whether they are offering advice or information.

Furthermore, 35 failed to do a proper check to ensure that the individual could afford to repay the mortgage.

Two thirds tried to sell the researcher insurance at the same time – often for an unsuitable product – and many failed to tailor their advice to the individual’s needs, finds Which?.

“Listening to people’s needs and giving tailored advice should be the bread and butter of a mortgage adviser’s job, but too many of the advisers that we visited took a ‘one size fits all’ approach or seemed as concerned with selling an insurance policy on the side,” said Martyn Hocking, editor, Which? Money.

During the research one adviser said of the KFI they must provide “a lot of the stuff in there is just blah, blah, blah”, while another dismissed the idea that interest rates might fall, just a few weeks before the Bank of England cut them again.

A third tried to use Kylie Minogue’s recent breast cancer diagnosis to persuade the researcher to buy critical illness cover.

“With mortgage costs soaring and the spectre of negative equity returning to the property market, it’s important that people get help to find the right deal,” said Mr Hocking.

“There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it’s vital people do their homework and choose their adviser with care.”

According to figures from the Royal Institution of Chartered Surveyors (Rics), home sales have plunged to their lowest levels since surveyors started collecting records in 1978.

In the three months to 30 June, estate agents said they sold an average of 15 properties - this is almost 40% lower compared with the same period last year.

Prospective buyers are deterred from the market as many of them are unable to obtain a mortgage due to the current mortgage freeze and those that can get a mortgage are charged hefty deposits. Buyers who do not have the funds for a deposit of over 5% will find it impossible to secure a mortgage deal.

At a time when house prices are falling, this is seen as an encouraging sign for first-time buyers, however tightening lending conditions is proving to be a problem for would-be buyers, according to Jeremy Leaf of Rics.

One estate agent in North Yorkshire said the squeeze on lending is having a devastating affect on the market.

However, the number of surveyors reporting house price falls was not quite as high in June as the previous month.

Surveyors reporting house price falls rather than increases was 88% in June, marginally better than the 92.2% reported in May. However, all surveyors in the West Midlands held the same view that prices were falling.

Last week, the Halifax reported that house prices in the UK fell by 2% last month, and prices are 6.1% lower than they were compared with this time last year.

Its rival, the Nationwide, said that house prices fell by 0.9% on average last month, with the average home costing 6.3% less than 12 months ago.

As a result of falling home sales, many estate agents are closing offices. The housing slowdown is also having an impact on housebuilders after Persimmon, Barratts, Bovis and Redrow Homes all announced job losses last week.

The housing market is suffering currently due to falling house prices while the current squeeze on mortgage lending is also having a devastating affect.

In a bid to kick-start the mortgage market, the Council of Mortgage Lenders (CML) has announced plans which include UK banks and building societies to offer new mortgages.

Furthermore, it wants the Bank of England to guarantee a market in mortgage-backed securities and covered bonds.

As a result, funds would be pushed back into mortgage lending by encouraging investors to buy mortgage-backed securities.

The mortgage market is suffering due to a shortage of available funding to support new mortgage lending. This has resulted in the amount of mortgage deals on the market diminishing and the cost of these types of loans rising.

Back in April, the Bank of England launched the Special Liquidity Scheme which was designed to improve the liquidity position of the banking system and raise confidence in financial markets.

However, the CML recently said the benefits of the scheme have yet to be felt by lenders.

According to the CML, the new scheme would be quick and easy to set up and would restore confidence back into the market.

The plan will no doubt be good news for first-time buyers who are desperate to get onto the property ladder as house prices continue to fall but are unable to secure a mortgage.

Earlier this week, the Government said it was considering cutting stamp duty in a bid to kick-start the property market.

According to many experts, stamp duty is one of the major factors that is discouraging buyers from the market.

However, according to Ministers, changes to stamp duty would only make a difference if they were accompanied by further efforts to increase the supply of mortgages.

The Association of Residential Letting Agents (ARLA) has published research entitled “The Modern UK Housing Market - Origins and Prospects”, in which it predicts that rents in the private rented sector will rise significantly in the short term.

The report, prepared by Professor Michael Ball of Reading University, forecasts a 10% to 15% rise in rents both this year and next, with stronger demand created by the fact that young people are delaying the purchase of their first home.

The study asserts that the private rented sector is a stablising influence on the UK residential property market because it accommodates those who in the current housing market downturn would be over-stretched borrowers with rising negative equity.

It also concludes that house prices will almost certainly increase faster than commercial real estate over the longer term and that residential property therefore provides better investment potential.

The report estimates the value of properties in the UK private rented sector at over £500 billion.

The figures is ahead of the total of all privately-owned commercial property, including offices, shops, hotels, factories, warehouses and leisure facilities.

According to Professor Ball, the typical UK rental property is a terraced house in an outer or inner town or city suburb.

Only around 13% of such properties were built after 1985, with approximately two-thirds dating from before 1945 but recently modernised.

Finally, the author of the report predicts that affordability problems are likely to continue for those hoping to get a foot on the property ladder, even if the housing supply increases.