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Generation rent trapped - no hope of even renting more than a room, never mind buying a home
Topic Started: 8 Oct 2013, 12:38 PM (1,859 Views)
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'Generation rent' - trapped with no hope of buying a home

Thursday 03 October 2013
Ciaran Jenkins

The government is intent on helping people onto the housing ladder. But for some, property ownership doesn't come into it. Their dream is to be able to afford to rent a flat, not just a single room.

If there was one thing "generation rent" did not need, it was for rents to go up. It is a generation already defined by its inability to scale the property ladder. Now, for some, even renting a home may seem out of reach.

According to the National Housing Federation, rents have increased more than 40% in some areas over the past two years. And it is set to get worse. Rents, already at an historic high, are expected to rise again. Market forecasters, Oxford Economics, are predicting hikes of 5% each year until 2020.

As a result, generation rent is downsizing. And as demand for smaller, cheaper accommodation grows, investors and entrepreneurs are rushing to cash in.

Micro-apartments

A property developer from China is banking on the future of the rental market being tiny. In floor space at least.

He’s hoping to attract priced-out tenants with a new development of micro-apartments. Planning permission has been secured for 160 one bedroom flats starting at just 18 square metres, less than a third the size of a squash court.

Surprisingly, the micro-apartments will be located not in one of the UK’s major cities, but in Oldham.

“Do you really think Oldham’s ready for this kind of living?” I ask Dr Francis Liu, Chief Executive of G-Suite Holdings, the Chinese company behind the project.

“Yes, I come from Hong Kong and I know people are looking for quality buildings with everything in,” he says.

"The trend in New York and San Francisco is for tiny micro-apartments. The idea is coming from those people."

I put it to Dr Liu that unlike San Francisco and New York, Oldham has plenty of land ripe for development, which could easily house decent-sized homes.

"The key is affordability," he replies. "You don’t have to be an accountant to work it out. The smaller size will result in lower rental."

But what does Oldham gain from a development like this?

None of the apartments have been earmarked as affordable housing, and local first time buyers appear not to be the developers’ target market.

Instead, the apartments will be sold to investors in the Far East. They are being promised an 8% return on their investment.

"Micro means small," says Dr Liu. "Boutique means it has some style. Apartment means self-contained. You can have everything within a tiny space, but without giving up any luxuries."

Except, of course, the luxury of space.

Rent-to-rent

But then the young adults of Generation Rent are increasingly prepared to sacrifice square footage for affordability.
Doncaster-based landlord Kim Stones

It’s something Doncaster-based entrepreneur Kim Stones realised to his advantage a few years ago. He claims to be a pioneer of the profitable property market niche, "rent-to-rent".

"We basically take a property from a landlord, pay him a long-term guaranteed rent and then sublet it on a room by room basis. That’s how we make our margin," Kim explains.

Kim’s strategy is to adapt living spaces in order to maximise profits when the property is sublet. He rents three bed properties from landlords and sublets them as five individual rooms by turning sitting rooms and lounges into bedrooms. He is at pains to point out that he follows all relevant regulations.

"We’ve got 23 rent-to-rents," says Kim. "Our target is a minimum £400 a month profit on any property, and we do have properties that make £1000 net profit a month."

On his website, Kim claims to earn around £6,000 a month from tenants in receipt of housing benefit. However, he says young local workers make up two thirds of his client base.

"The sales market over the last five years has been dormant," he says. "It just means demand for rental, whether it’s rooms or houses, has increased."

"Somebody who is 22 or 23 years old, they don’t want to live with mum and dad anymore, they want to move out, but they can’t afford it."

To illustrate the point, Kim takes me to meet Daniel Elder. Daniel is 21 years old and works in a warehouse in Doncaster. The sum of his property ambitions are to one day rent a place of his own.

“This room here is my personal space, it’s the only thing I’ve got really,” he says.

Doesn’t he dream of owning a home? The government has, of course, rushed forward its Help to Buy scheme. It is available to anyone with a deposit with a deposit of 5% or less, including first time buyers.

“Nah, not really,” says Daniel. “It just wouldn’t be affordable. I can’t even consider it.”

Read more: http://www.channel4.com/news/broken-ladder-generation-rent-microapartment-oldham-landlord
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Billy Jack
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The Duke of Brisbane Town

Hello friend, That's a good article isn't it. I think they could be right. The prices are quite high.

But soon them young folks out there will find out there are options. I am new to the internet myself but them young folks even have it on their telephones and portable computers and such. So this is what I think will happen: http://australianpropertyforum.com/single/?p=8432470&t=9967728

Meanwhile half of Bangladesh will come here to live. We need them folks here to build the place up and make it better. Because the longer the internet age goes the more the truth will come out and very soon people won't be too keen on immigrating to a place where it costs a million dollars to live at the ass end of Stones Corner and there aint nothing but two supermarkets and a whole bunch of traffic, especially when they could choose another place. You see, that immigration policy in the other thread is smart. Get em now before they don't know too much.
Tell Billy Jack the Truth
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Frank Castle
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Business As Usual

Billy Jack
8 Oct 2013, 12:44 PM
Because the longer the internet age goes the more the truth will come out and very soon people won't be too keen on immigrating to a place where it costs a million dollars to live at the ass end of Stones Corner
You're a fuckin idiot.
It costs nothing like a million dollars to buy in stones corner
In fact I think you would be hard pressed finding anything there at that price
A top floor 4 bedroom "penthouse" is only $550k
http://www.realestate.com.au/property-unit-qld-greenslopes-114680107
A 2 bedroom refurbed unit is $295k
http://www.realestate.com.au/property-unit-qld-greenslopes-113956379

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Because the longer the internet age goes the more the truth will come out

As I have just demonstrated :re:
Alex Barton
8 Oct 2013, 12:38 PM
'Generation rent' - trapped with no hope of buying a home
Funnily enough I have tenants now probably paying MORE in rent than the cost of buying the property.
Edited by Frank Castle, 8 Oct 2013, 01:16 PM.
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goldbug
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rents have increased more than 40% in some areas over the past two years

I think if my mates with rentals had been able to up them 40% I would have heard about it. They were nostop braggards for years until the gfc. Were talking SEQ here.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Billy Jack
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Frank Castle
8 Oct 2013, 01:14 PM
You're a fuckin idiot.
It costs nothing like a million dollars to buy in stones corner
etc etc insulting behavior
As I have just demonstrated :re:

Funnily enough I have tenants now probably paying MORE in rent than the cost of buying the property.
Friend, I aint sure if I like your tone. Why do you have to speak to me on the internets like that? Didn't you learn good manners from your Ma?

Are you saying that when you buy a $250,000 or $500,000 unit and borrow the money, you didn't have to earn $1,000,000 to pay that back over 20+ years?

Why act like a bit rabbit friend? This is why need them folks from Bangladesh, at least they can count and understand numbers.
Tell Billy Jack the Truth
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Frank Castle
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Billy Jack
8 Oct 2013, 04:42 PM
Friend, I aint sure if I like your tone. Why do you have to speak to me on the internets like that? Didn't you learn good manners from your Ma?



Stop acting like a wanker then
Quote:
 
Are you saying that when you buy a $250,000 or $500,000 unit and borrow the money, you didn't have to earn $1,000,000 to pay that back over 20+ years?

Clearly simple maths evades you.
Try looking at any calculator and work it out for yourself
and add in the fact that your wage will be increasing but your loan amount is decreasing, so anyone with half a brain should pay it off a lot quicker.
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Why act like a bit rabbit friend?

Why are you acting like a retarded redneck friend?
Ignore posts by The Whole Truth · View Post · End Ignoring
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goldbug
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:pop:
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Billy Jack
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The Duke of Brisbane Town

Frank Castle
8 Oct 2013, 05:28 PM
Stop acting like a wanker then


Clearly simple maths evades you.
Try looking at any calculator and work it out for yourself
and add in the fact that your wage will be increasing but your loan amount is decreasing, so anyone with half a brain should pay it off a lot quicker.


Why are you acting like a retarded redneck friend?
Because wages will just go up and up and up and up and up. And friend, it's not like it would take two wages to pay back them mortgages is it? And it's not like the actually cost of the money is relative to the cost of living, and food and goods are relatively cheaper than ever in history and property is the other way. I believe it is. Why are you acting all ghetto here with your insults friend? Didn't your Ma teach y'all any manners?

And it's not like folks ever have to pay interest on that mortgage while their job gets shipped to Bangladesh and their brand new B Com is good enough for them to get that extra shift at the Pig and Whistle and their wages are docked to pay for welfare of the 100,000 new Bangladeshis who are fresh off the boat, is it now?
Tell Billy Jack the Truth
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stinkbug
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Billy Jack
8 Oct 2013, 07:45 PM
Because wages will just go up and up and up and up and up. And friend, it's not like it would take two wages to pay back them mortgages is it? And it's not like the actually cost of the money is relative to the cost of living, and food and goods are relatively cheaper than ever in history and property is the other way. I believe it is. Why are you acting all ghetto here with your insults friend? Didn't your Ma teach y'all any manners?

And it's not like folks ever have to pay interest on that mortgage while their job gets shipped to Bangladesh and their brand new B Com is good enough for them to get that extra shift at the Pig and Whistle and their wages are docked to pay for welfare of the 100,000 new Bangladeshis who are fresh off the boat, is it now?
How will the jobs get sent to Bangladesh if the Bangldeshis all come here?
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Billy Jack
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stinkbug
8 Oct 2013, 07:48 PM
How will the jobs get sent to Bangladesh if the Bangldeshis all come here?
Would you care to respond to my post with some thought and consideration?

I don't get it friend. Yes people are buying apartments and homes in the ass end of Annerley, Stones Corner, Paddington, Rosalie, Nundah and other ghettos for half a million dollars, and they will end up paying a lot more than a million dollars in terms of opportunity costs, interest, two incomes to survive, inability to move to other locations, casualization of work, and cetera, and all of on their net salaries.

But I guess if they are property owners they can be happy. Billy Jack wouldn't want them special investor folks to be sad now. After all, everyone in Scarsdale envies these fine folks in the ass end of Stones Corner and wants to swap places with them.

By the way friend, there are a lot of Bangladeshis in Bangladesh - but not all of them have boats.
goldbug
8 Oct 2013, 01:37 PM
rents have increased more than 40% in some areas over the past two years

I think if my mates with rentals had been able to up them 40% I would have heard about it. They were nostop braggards for years until the gfc. Were talking SEQ here.
Yes friend, being an investor here in the greatest city in the world - ie Brisbane Town - means you are the top of the heap, the best of the best and you have the right to tell everyone at the BBQ how wealthy you are. So it is strange they aint boasting about them rents now, aint it?
Edited by Billy Jack, 8 Oct 2013, 08:18 PM.
Tell Billy Jack the Truth
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