1. The condition of the property.

2. The age of the property.

3. The property's rental history.

4. The amount of repair work needed.

5. The zoning of the property.

1. Research the market and understand the different types of real estate investment available.

2. Create a financial plan and set realistic goals.

3. Find a property that meets your criteria and analyze its potential for profit.

4. Analyze the market and the local economy to determine the best areas to invest in.

5. Obtain financing for your purchase, either through a bank loan or alternative finance lender via GIC Capital

6. Complete all necessary paperwork and purchase the property.

7. Manage the property, either through a property manager or yourself.

1. Regulation and Regulatory Constraints 

2.  Timing & Simplicity 

3. Business and or Investors' Need For Flexibility 

By CEO, GIC Capital 

It’s impossible to ignore the plight of generation rent. The issue has become so big, with so many affected, that it’s almost a daily occurrence to confront the latest grim facts and figures. Those in their 30s and younger have found the housing market riddled with pitfalls and dead ends, and no one really seems to know what to do about it.

With the prospect of home ownership a seemingly unattainable dream for many, let’s take a look at the latest information and see what the real story is.

The Figures

We all know that house prices have been spiralling upwards for a long time. Whilst this is great for anyone who has already secured their home, it is an obvious barrier to younger first-time buyers.

The Resolution Foundation – which collates and reports on living standards in the UK – recently released a report that outlines some of the biggest issues and challenges for generation rent. 

If current trends persist, the report found that a third of generation rent will still be renting when they reach retirement age. And, by that point, it is same to assume the prospect of home ownership will be firmly off the cards. 40 percent of 30-year olds are currently renting privately, which is four times the rate for Generation X. At the same time, housing benefit covers only 55 percent of housing costs and 1.8 million families with children are living in private rented accommodation, up from 600,000 in the early 200’s.

All of this paints a very grey picture for the future housing prospects of generation rent.

The Causes

Unluckily for generation rent, several factors have come together to keep them from getting a foot on the property ladder.

In line with rising house prices, the amount of money required for a deposit has also risen. With wages only now beginning to rise slightly, this issue alone has left many younger people without an insurmountable obstacle to climb. At the same time, social housing has been sold off in vast swathes by cash-strapped councils looking to make ends meet. Gone are the days of cheaper, affordable social housing for many.

Whilst the government has attempted to remedy this via ‘Help to Buy’ schemes, this has only pushed demand and prices higher for first time buyers, whilst also creating more shortages. All in all, it’s a confluence of factors that is only making things worse for generation rent. 

With generation X seeking out ambitious job roles and aspiring to move out of their parental home and the older generation living longer than ever and many continuing to work, it seems that steps should be taken to bridge the gap between these two groups.

A suggestion has recently been put forward by the Resolution Foundation. The British think tank endeavours to improve the quality of life for individuals in low and middle-income families and feels like a £10,000 cash boost for the young and a rise in the taxes for pensioners could go some way to bridge the gap.

So, what exactly would this entail and just how feasible is it?

The chairman of the Resolution Foundation feels that the contract between the young and old has ‘broken down’ and without drastic and sudden action, the younger generation will become increasingly angry. 

Suggestions put forward by The Resolution Foundation include:

•  A £10,000 payment being given to all people at the age of 25. The payment would be funded by a newly issued ‘lifetime receipts tax’ that would replace the current inheritance tax.
• Making the financial earnings of those that are above state pension age subject to National Insurance contributions.
•  Abolish Council Tax and replace it with a new property tax that would target wealthier homeowners. 

The report that has been put forward by the organization is calling for an NHS ‘levy’. The figure would total £2.3bn and would be funded thanks to an increase in national insurance contributions, paid by those that are over the age of 65. 

The £10,000 payment that individuals would receive at the age of 25 could be used to pay for a deposit on the home, improve their education or even start their own business. With house prices rising though, there is concerns that this payment would do little to assist those ready to progress onto the property ladder or expand on their potential in the workplace.

Having said that, the proposals put forward by the Resolution Foundation would also mean the scrapping of the Council Tax system, which would be replaced by a new form of taxation that could target those more financially secure and that own their own property.

While the suggestions seem to take into account the best interests of both sides, just how far could they really go to wipe out years of political inertia?

It’s no secret that there is a chronic housing shortage in the UK at the moment. The average estate agent typically has 42 homes on their books per branch but currently in London, where the housing shortage is at its most severe and concentrated, there are just 33.

The Prime Minister recently indicated that developers are to blame for the lack of housing in the UK, which is impeding millennials from stepping foot on the property ladder, but just how much truth is there behind her statements?

A vicious cycle

At present, land with planning permission for housing costs around £6 million per hectare. These steep rates are perhaps the reason why the Prime Minister feels that developers are to blame for the housing shortage in the UK. There is a lot of speculation that developers hoard land once they have purchased it, sit on it for a while until they obtain planning permission and then sell the land on for significantly more than what was originally paid.

There are also issued being raised regarding the bonus structures that many construction firms use, which mean that development bosses are cashing in on commission not on the number of houses that they build, but on their profits or share price. This could go some way to explain why many construction firms lack the incentive that is needed to build more houses and address the UK shortage.

This problem isn’t anything new either. An investigation by The Guardian in 2015 revealed that a staggering 600,000 plots with planning permission were owned by some of the largest property builders in the UK, but weren’t being built on.

Steps to change

In an attempt to deliver the homes that the UK needs, the Prime Minister has implemented reforms to the National Planning Policy Framework, which will see the use of land being maximised, protections for the Green Belt being strengthened and a greater emphasis being put on transforming planning permission into new homes.

But just how much of an impact will these changes have? They seem to have been met by stiff opposition by some interested parties, who feel that involving and empowering councils is a better course of action to take, but only time will tell whether the Prime Minister’s decisions will mend the draught that is currently stifling the UK property market.

Are you a property trader or landlord? Our Expansion Capital financing option can help you obtain the appropriate capital to place a deposit on another buy to let or commercial property.