Five Golden Rules of Investing

1. Always buy from motivated sellers
Instead of looking for a property you’ll like and then negotiating with the seller, a smarter strategy is to look for motivated sellers who will be flexible on the price and / or the terms of the sale, and then decide if you want to buy that particular property.

If they are prepared to sell at a discount for a quick sale, the amount of discount will vary depending on the motivation of the seller and the general market conditions.

In a rising market you may be happy with a 15% to 20% discount. In a falling market you would want a bigger discount of 25% to 40% to give you more of a safety buffer in case prices come down further.

Just to be clear here, this is not saying that you always need to get a discount off the sales price. Sometimes property is already a great buy at the full asking price because it may already have been lowered for a quick sale. This is where knowing the values in your local market is really important so that you can spot a good deal when you see it.

Many investors get fixated about buying below market value, which means they are likely to miss out on potentially profitable deals because they don’t think they should pay the full asking price. If it is a good deal, investors may sometimes pay the full asking price and more, especially if they can add value to the property. We also need to recognise that some sellers may not be able to offer you a discount because there is no equity in their property. However, if they are motivated, they may be more flexible on the terms of the sale, for example, when you actually pay for the property.

Price is not the only factor in negotiation. This means you may be able to use strategies such as ‘Exchange Delayed with a Completion’, or ‘Purchase Lease Option’. These strategies only really work if the seller is motivated.

2. Buy in an area with strong rental demand
This is a very important rule. As a property investor your aim should be to buy an investment which will not only pay for itself, but also make a cash profit (positive cash flow) each month. There are running costs associated with owning a property, but the basic concept is that the rent you receive from your tenants more than covers all of the costs. If you have no tenants, you have no income, which means you have to cover the costs yourself. Your investment then becomes a liability, rather than an asset.

You need to accept that as a landlord you may occasionally have void periods on your property, which means no tenants, and so you need to meet the costs. You can dramatically reduce potential void periods by only ever buying property in an area with strong rental demand. You want to ensure that if your current tenants decide to leave the property you can quickly and easily rent it to new tenants at the full market rent.

A general rule of thumb is to buy properties in areas with strong local employment and good transport links with local facilities and amenities. When you know how to do it, you can easily assess the true rental demand in any area by using the internet to find like comparisons, speaking to local letting agents, and even placing dummy adverts to test rental demand. If you are not sure about the rental demand in an area, then don’t buy the property to avoid longer than expected void periods, which will cost you money. Due diligence is very important before you make any investment decisions.

3. Buy for cash flow
As already mentioned in Rule No 2, your property should create a monthly positive cash flow for you, so that it is an asset rather than a liability. As prices shot up towards the end of the last property boom, it became increasingly difficult to find properties that stacked up to give a positive cash flow. Many investors were buying properties which would only just “wash their face”, where the rent just about covered the monthly costs. Even worse, in the hope that prices would keep going up, some investors were buying properties that had negative cash flow, whereby the rent was not enough to cover the monthly costs. This meant that the owners had to subsidise the property each month, not a good position to be in, especially if you have a lot of properties like this.

When the property market crash came in 2008, many investors, both amateurs and professionals, owned properties that were worth less than they had purchased them for and were costing money each month just to hold them. In this situation, if you can afford to hold the property, you just need to sit back and wait for the market to recover. But if you can’t afford to continue subsidising it, and you are forced to sell, then that’s one of the ways you could lose money in property. Fortunately, the good news is that, with the benefit of hindsight, you can learn from other people’s past mistakes, so that you don’t have to make the same mistakes yourself.

You should only ever buy property where each month there is a profit from the rental income you receive after paying all of the expenses, including mortgage payments, insurance, repairs and management fees. Positive cash flow is king. Although we expect property prices to rise in the long-term, if you buy your investments ‘as if prices will never go up again’, you will be forced to buy only properties which give you great cash flow now. Extra cash flow will help you to build up a safety buffer, and help you cover potential rises in interest rates in the future.

4. Invest for the long-term buy and hold
Some investors like to buy and sell property to make a profit. This is a good strategy (in a rising market), however, each time you sell a property you will crystallise your profit and you will never make any more money from that particular property. Whereas, if you buy and hold, you can make money from the rental profit each month, as well as long-term capital growth. This way you work once and get paid forever by that property. The real profit in property is in buying and holding for the long-term to benefit from significant capital growth. The key here is being able to afford to hold it and this is why a positive cash flow is so important, so that you don’t have to subsidise ownership of the property. If you plan to hold for the long-term and your property is rented out creating a positive cash flow, you needn’t be concerned by short-term fluctuations in price.

If you do sell a property investors may suggest you reinvest some of the proceeds into another property that will give you a better return. To conclude, many believe it is best to hold property for the long-term. That is how you can become very wealthy and pass wealth on to future generations.

5. Have a cash buffer
Often you meet investors who had to sell their properties because they could not afford to hold them. A problem investors sometimes hear about is of properties occasionally getting damaged or just enduring wear and tear, making them difficult to rent. The landlord may not have the spare cash to make the necessary repairs and improvements and so the property remains void, which ends up costing the owner even more money. This becomes a vicious circle whereby the landlord can’t afford to make the improvements because he has no rent coming in, and can’t get any tenants because he can’t afford to make the improvements. These landlords often become motivated sellers.

The way to avoid this potential problem is to make sure you always have a cash buffer set aside to cover unexpected expenses. In reality, you can get insurance to cover most of the potential issues, including a tenant not paying the rent. However, the more insurance policies you have, the higher your costs and so the less cash flow you will have each month. Investors may recommend you have a cash buffer in place, which you can use if need be. This could be cash in your bank, a clear credit card, or some cash in someone else’s bank that you have agreed you can borrow if necessary. The size of this buffer depends on your personal level of risk. A few thousand pounds per property might be a good idea. This will help you avoid becoming a motivated seller yourself.

An introduction to planning permission

If you are ever considering being a buy-to-let landlord it is likely you will envision at some point making changes to your property in order to enhance its value. Depending on whether you wish to alter, you may need to obtain planning permission. In fact, it would not be unreasonable to go as far as to say that knowing about planning permission is an essential part of any buy-to-let landlord.

In 1948 the right to carry out property development was nationalized. In other words, landowners’ right to build and alter buildings, or to use land or buildings for a different purpose, was taken away by the government. Since that date, anyone wishing to carry out development needs permission to do so.

Permission is given mainly by the local planning authority for the area, which in most cases is the district, borough or city council (collectively referred to as ‘district’ councils). In addition, local government was charged with preparing plans for their areas showing where various kinds of buildings could and could not be built. Thus, the modern comprehensive planning system was born. The system is now overseen by Department of Communities and Local Government in England; the Scottish Government; the Welsh Assembly Government and the Department of the Environment in Northern Ireland.

The planning system was introduced so that property development could be controlled in the public interest. Previously, buildings could be built anywhere, or they could be demolished, and land and buildings could be used for any purpose the owner chose. This was thought to be inefficient and sometimes had harmful consequences. The idea behind the planning system is that new buildings and uses are controlled to ensure:

that incompatible uses are not sited together;
the preservation of important buildings and areas;
the conservation of the countryside and natural environment;
the prevention of urban sprawl;
that the appearance and layout of new development is compatible with existing development;
that resources are not wasted;
that infrastructure can be provided efficiently;
that people’s enjoyment of their properties is protected;
highway safety;
co-ordinated provision of new housing and employment facilities.

However, the planning system is not coercive. It relies on landowners wanting to undertake development. An owner does not have to use land in a particular way just because it is allocated for that use or development. Similarly, even when permission is given, the owner is not compelled to act on it. The system is only concerned with what can be built. It does not deal with how it is built. Structural stability, health and safety, sanitation and so on are dealt with under separate legislation and regulations.

Fundamental to the planning system is planning policy. As well as allocating sites and areas for certain types of development, council development plans contain guidance and standards for buildings and uses, relating to matters such as design, layout, density, garden space, privacy, noise, highway safety, size and mix of buildings, parking and many other issues. This guidance, and standards, is known as planning policy and can be set out in a range of development plan documents. There is a preparation process that development plans must go through and public consultation and opportunities for public comment are built into the procedures.

In addition to local policies, the governments of the UK publish national planning policy documents. Inevitably, these are more broad-brush in nature. Their function is not only to guide decisions on individual development proposals but also to give direction to the development plans drawn up by local authorities. The government indicates what should be taken into account when preparing local plans and, in some areas, the thrust of what they should say. When seeking permission for development, planning law requires the body responsible for making the decision to do so in accordance with formally drawn up local planning policy, unless there are sound reasons for coming to a different conclusion. Therefore, planning policies are the prime consideration in whether planning permission will be given.

Permission is needed for development; consequently there is an application process for seeking that permission. Two types of planning application can be made. First, there are ‘full’ or ‘detailed’ applications. These show all aspects of the proposal and are specific about precisely what would be built, what alterations would be made or what use would be made of land or buildings. Second, there are outline applications. These are made to establish, in principle, whether a building can be built, leaving some or all details of the scheme to be determined subsequently. Outline applications can only be made for buildings not for changes of use, including conversions. The details of the building and site layout are called ‘reserved matters’, because they are reserved from the outline application. Another type of application is then made for the approval of reserved matters within the scope of the original outline permission. Once they have been approved, the outline and reserved matters together are the equivalent of a full planning permission.

Although planning permission is supposed to be obtained for development before it takes place, inevitably building work and changes of use happen without the necessary consent. In these circumstances, an application can be made for permission after the event. This is generally referred to as ‘retrospective’ planning permission.

There are various other applications which can be made after planning permission has been granted. Conditions are attached to permissions and there is a procedure for applying to remove or vary conditions. In certain circumstances, this type of application can be used to make changes to the design or layout of an approved scheme. There is a separate procedure for making very minor changes to a planning permission, called a non-material amendment. One condition attached to a planning permission is a time limit within which to begin the development permitted; this is usually three years for full planning permission (five years in Northern Ireland and Wales). Applications to extend the duration of planning permission are often referred to as ‘renewals’ although they are, technically, new applications.

Of course, not all planning applications are successful and the system includes an appeals process. Appeals are made to central government bodies: the Planning Inspectorate in England and Wales, and the Planning Appeals Commission in Northern Ireland.

The appeals system in Scotland is a little different. Appeals against decisions taken by council officers are decided by a group of elected councillors. Appeals against decisions taken by the council’s planning committee are made to the Scottish Government’s Directorate for Planning and Environmental Appeals.

Appeals can be made when a council refuses permission, fails to make a decision within set time periods, or grants planning permission subject to conditions which the applicant wishes to vary or remove.

Appeals provide the opportunity for the merits of a proposed development to be considered by an independent inspector (reporter in Scotland, commissioner in Northern Ireland), free of local politics. Appeal decisions, and the interpretations they contain, are supposed to be taken into account by councils when deciding planning applications. Thus the appeals system is intended to keep a check on councils and to provide some consistency in decisions between councils.

Living room and kitchen design for aspiring landlords

Living rooms have changed so much over the last few generations. In the good old days, your living room might have been known as a sitting room, a drawing room, a front room or a parlour. The living room was often the space in which you could grandly declare your style, status and taste, because it was here that visitors would be invited when they came to your home. In many families, the living room was a child-free zone, kept for ‘best’ to impress! Times have undoubtedly changed, and not that many houses have space for such luxury – spreading out to fill every room in the house instead! In fact, the separate ‘formal’ drawing room often feels like a fairly boring and redundant space – rarely used and usually not very comfortable.

Here in the 21st century, we are much more adventurous with our use of space, and it’s increasingly common to combine the kitchen-dining area, making the kitchen very much the central hub of the home. Many kitchen-diners have their own TV screens, and most homes have a number of TVs scattered throughout. For this reason, the ‘new’ living room isn’t necessarily a place for sitting down to watch TV. In fact, in my home we watch more TV in the kitchen than in any other room. So maybe it’s time that we rethink the way we use our living spaces. Sure, get a TV in there for times when you really want to flop and chill out; however, it makes sense to think about giving your living room a new role.

Today’s living rooms can provide space for reading, listening to music, having a relaxed chat and gathering around the fire. Where kitchens can often feel like ‘harder’spaces, with functional flooring and finishes, the living room wants to be a place where you can curl up and get cosy. It’s important that any living room feels relaxing and comfortable. It’s undoubtedly a space where you can hang out with your kids, but there is also an opportunity here to make this a space that is a little more grown-up. The TV will always be the inevitable focus of any living space (or, indeed, any room in which it is situated), but by planning a room properly there are ways to give equal priority to a beautiful, real fire. Real fires have such a powerful psychological appeal, and represent one of the very best ways to truly relax.

We live in an age in which we all love a greater sense of space in our homes. Most of us don’t want to live in tiny, box-like rooms, all with a similar scale, size and proportion. Instead, we like variety in our homes, diverse spaces with plenty of light and a great flow of air. We like rooms to be sized to match our requirements; in other words, we need them to be big enough to host our lifestyles, and smaller when we want to be cosy. The lighting and finishes are then chosen to create an atmosphere appropriate to those rooms.

If one thing’s for sure, kitchens are the absolute heart of the home. They aren’t just places for cooking, but a hub for socialising with family, friends and relatives. The 21st-century family kitchen is a virtual hive of activity and, for me, it is without a doubt the most important room in the house. Dining rooms are, however, something completely different. There really has been a change in our view of these spaces, particularly in smaller homes. Sure, if you have a grand house with loads of space, then a formal dining room is a fantastic space for those special occasions – huge dinner parties, or family gatherings. However, if you need more space in your house, and need it in rooms that might sit alongside your dining room, then this is the first room that needs to go.

Another reason why we are seeing the death of the formal dining room boils down to the fact that younger families simply don’t use formal dining spaces in the same way that previous generations did. The modern family is much more relaxed and far less stuffy. Times are changing and we don’t seem to mind the idea of entertaining in what is effectively kitchen space.

Your kitchen has to be ruthlessly functional, highly durable, and intelligently planned to suit the exact needs of your family. If it’s not, then you have not only wasted a large proportion of your refurbishment budget (even the most affordable kitchens still cost money), but it will drive you mad every time you use it. Cooking for you and your family should be a pleasurable and rewarding experience, and not a source of frustration.

In the early 1950s, researchers in the US developed the idea of the ‘work triangle’. This is an ergonomic concept derived from research to improve industrial efficiency, which was then applied to the domestic kitchen. Whether you are planning your own kitchen, or enlisting the help of a professional, you can use the ‘work triangle’ method to check the efficiency of your design. The three points of the triangle correspond to the three main kitchen activity zones. There is the wet zone (the sink), the cold zone (the fridge) and the hot zone (the cooker). Their position and relationship to each other is critical to achieving an efficient and comfortable kitchen design.

The recommended overall distance (the total length of the three sides) is 6 metres (20 feet), with no two points being less than 90 centimetres (35 inches) apart. Sound complicated? It’s not really. Read on! If the total is less than 4 metres (12 feet), then your appliances will be too close for comfort. If it’s greater than 8.5 metres (26 feet), then your appliances will be too far apart and you’ll waste time and effort trekking between them. A good way to burn off the calories that you are about to put on, but not an efficient kitchen design! Try to assess the traffic flow across the triangle, too. If you have a large kitchen, people walking through the space may not be a problem, but in small rooms it can reduce efficiency even further.

A quick summary of what mediation entails

Mediation is a voluntary process in which the people involved in a dispute agree to sit down together with a neutral third party – the mediator – and discuss their mutual problem. They then work together, seeking a solution to the problem with which they can all live. Most often there are two people involved in a dispute, but there is no limit to the number that can be involved, or to who can attend a mediation to help resolve the dispute. While the mediator facilitates this process, the solutions that the people in the dispute come up with are entirely their own.

Mediation is voluntary because if someone absolutely does not want to attend a mediation, trying to force them to do so is unlikely to help in reaching resolution. You may have all kinds of misgivings about the party or parties with whom you are in dispute as you go into mediation, but essentially you must want to at least try to solve the problem. Mediation cannot work in any other way.

Generally, as the first step in the mediation process one party will contact the mediator expressing his or her desire to explore the options for mediation. If the dispute has reached a point where the parties are no longer in communication, most mediators are happy to speak to each person individually and confidentially, and to handle all contact in setting up the meeting between them if that facilitates the process. What the mediator cannot do is to force or coerce the other party to attend. All he or she can do is to talk to them and to explain the principles and processes of mediation, taking care to answer all their questions. Once the parties agree in principle to mediation, and before they’ve even sat down with the mediator, they are showing a willingness to resolve the dispute.

Mediation’s emphasis is on moving forward – not on looking back. Your dispute has got to where it is now and, however it got there, focusing on that part of the problem usually does not help anyone come to a resolution. Mediation’s purpose is to focus on the future and to progress on new terms with which everybody can live.

When you go to court, the focus is always on the past: who has been at fault, who has broken a contract, who has done something wrong, who has done what to whom. At the end of the court process a decision is handed down by the judge which attributes blame and prescribes a remedy. The court generally makes no attempt to give direction on how the parties should proceed in the future, and certainly does not want to involve itself in any ongoing supervisory role. This can be particularly difficult if the parties have to remain in any sort of relationship with each other such as in family cases or in cases involving relatives or work colleagues.

Mediation’s focus is on how to move forward and this is achieved by directing attention on how to solve the problem. It can also contain agreed terms for the future conduct of the relationship, if that is what the participants want.

Disputes in any context tend to generate a lot of bad feeling and high levels of stress. Have you ever been in a dispute with anyone? Most of us have. No matter how small the argument, feeling angry, unheard and misunderstood does not feel good, even if you are convinced that you are 100% in the right. Relationships of all kinds can be heavily damaged by dispute. The longer people remain in dispute with each other, the more they look for evidence to support their point of view in the argument and they therefore focus on the dispute. They fixate on this and focus all their energy on it to the extent that finding a workable and amicable solution that helps find a way out could not be further from their thoughts.

When people are in conflict, stress levels can rise sharply, and this is not healthy for anyone on either side of a dispute. Relationships outside the argument can also suffer when someone is very angry for such a very long time. When an amicable, acceptable resolution is reached, stress levels immediately drop and people feel much more positive and much lighter. A weight is lifted from their shoulders and the time and energy they once focused on the argument can now be used for things that are helpful and enjoyable to them.

Mediation is entirely confidential. This is another very important point and must be strictly observed by the mediator and by all parties to the dispute. Anything that is said or done in a mediation cannot be revealed to outside parties either during or after the mediation.

Mediation is also ‘without prejudice’. If your mediation is one of the few that is unsuccessful, and the decision is taken to proceed to court, whatever was said in the mediation may not be relied on in court by either party without the express permission of the party that made the statement. This means that if something new comes to light in an unsuccessful mediation, this information cannot be brought into the legal arena. Neither can the mediator be brought into the legal arena as a witness, save on the orders of a Judge.

The description of the mediation process as without prejudice means that anything said during the mediation cannot then be used as evidence in any legal proceedings which are being considered or already started. This allows parties to talk openly about options for agreement. Parties are able to suggest new and creative possibilities for agreement without jeopardising their chance to go (or to go back) to court if an agreement isn’t reached. A mutually agreeable outcome is often one which could not have been reached in court.

With the exception of family mediations, where some records must be kept, the mediator destroys all notes and information relating to the meeting apart from the agreements to mediate and the record of the attendees at the meeting. This further protects the confidentiality of all who attend as there is then no danger of any information falling into the wrong hands.

The voluntary and non-binding nature of mediation means that parties are not compelled to reach an agreement and options for an agreement can be discussed without binding themselves to a particular outcome. There is no consequence on the parties if they are unable to agree (other than financial loss where the mediation is self-funded). Mediated agreements are only binding if both parties wish them to be.

During a mediation, while the mediator assists and facilitates the process, the parties are responsible for generating options for agreement and the terms of any settlement reached. The mediator does not offer their opinion on the merits of either party’s case or seek to determine or impose any outcome. They do not make suggestions or recommend proposals for agreement (but may pass offers between the parties if requested to do so). Any agreement reached must be mutually acceptable to all parties and will have been created by them.

It is integral to the mediation process that parties are able to make informed choices, about what to propose by way of agreement and whether to reach a settlement. Mediators encourage parties to explore their positions so that any agreement reached can reflect their needs and interests. Mediators also encourage parties to consider the likely alternatives to reaching a mediated agreement to objectively assess any offer on the table. When a dispute involves legal rights and entitlements, parties should seek legal advice before commencing mediation. Parties may have a legal adviser present during the mediation (or available on the telephone), or be given the opportunity at the end of the mediation to consult a legal adviser before reaching a legally binding agreement.

Mediation invites parties to widen the potential options for agreement and explore new possibilities and ideas. Mediated settlements can be reached where direct negotiations have failed by getting the right people in the same room and breaking down barriers to communication. The time spent by a mediator encouraging parties to explore their own needs, as well as those of the other party, enables participants in mediation to make practical proposals. Such offers may have added-value as they may have huge significance to one party but can be provided with minimal inconvenience to the other. It may involve looking at previously unconsidered options and widening the options for agreement.

The Property Ombudsman offers free, impartial and independent service for the resolution of unresolved disputes between consumers and property agents. The scheme has been providing consumers and property agents with an alternative dispute resolution service for 27 years. A member agent signed up with The Property Ombudsman is obliged to adhere to a code of practice which consumers can take confidence from.

Increasing numbers of buy to lets by cash buyers

According to Countrywide, nearly two thirds of the properties purchased by landlords were made using cash buyers. This is in contrast to the other third, which were completed using arranged mortgages. The value of properties purchased for the purpose of buy to lets totalled £31.5 billion, and of these, those made using cash payments accounted for a staggering£21.0 billion.

What can we glean from these financial statistics? The first we can deduce from the smaller percentage share is that some landlords are leveraging their existing properties in order to expand their portfolios. The one third of properties purchased are to have been based on buy to let mortgages, where perhaps an existing mortgaged property is remortgaged to release equity that goes towards a second property intended for lease. It reflects the thinking that buy to let is increasingly seen as a better investment than traditional bank investments. And while buyers are aware that a fall in house prices may result again in the future, they seem to be banking on the annual percentage gain to negate that loss.

Slightly more worryingly is the fact that two thirds of purchases were made outright with cash buyers. This highlights the fact that landlords are increasingly getting richer through the housing market, increasing their financial wealth considerably enough to afford such purchases in cash. And it points towards a worrying trend where those who have capital find it easier to accumulate even more capital, while thousands of young buyers are increasingly priced out, and have to resort to one of the following options:

Commuting to work in an area where salaries are higher and living in an area where the house prices are lower; this commute length is likely to increase as the property prices and rents increase;

Paying high rental rates and not being able to save for a deposit towards a house until significantly later in life, or not at all;

Having to make do with a lower standard of rental housing, to be able to afford to live in a particular area;

The figure of two thirds of landlord purchases by cash surpassed the three in five figure in 2011. In 2007, this figure was only two in five. In other words, the proportion of landlords buying in cash has increased by 26% in ten years, from 40% in 2007.

A favourable location for outright buy to lets is in the North of England and Scotland. While that may be good news for home owners, in that it drives house prices up as well as rentals, tellingly, the majority of purchases made are not made by people within the area, but by landlords outside of it. And this cannot be good news for the people who live in these regions. The ideal scenario for most people is to work in an area where salaries are higher, to have an income that outstrips living costs such as rentals or mortgages. But with landlords buying in Northern England and Scotland, turning it into an investment hotspot, the people in the area are trapped in a cycle of comparatively lower salaries and high prices.

Nearly four out of every five homes in the North East of England were bought by outright cash buyers, an astounding figure.

The trend was however reversed in the capital. It can be surmised that property prices in London were too high for many outright cash purchases. Landlords buying in London were the most likely to use a mortgage and London was the only region where statistically, two out of five purchases were cash-backed, well under the national average. Of course, this suggests that in some areas the proportion of outright cash buyers was even higher.

What inferences can we draw from the data? The first is that investment properties are on the rise. For estate agents, a registration with The Ombudsman Property Service is a sign that you work within a framework of established rules and regulations, which may be the distinguishing factor in determining if landlords choose to entrust their properties to you to manage or not.

Young professionals seeking to rent a property should choose one managed by a landlord or agent signed up to The Ombudsman Property Service. This means they are obliged to work to professional standards. You may get the offer of a cheaper rental property from a private landlord, on fairly informal terms, but accepting this may mean you have no means of redress when disputes arise.

The news that rental costs are increasing are not good. What can young professionals do in order to get on the property ladder? No one wants to be committed to a lifetime of renting, if they could help it, because while the ability to move from place to place and lead a bohemian lifestyle may seem idyllic in your twenties, having no roof over your head when you’re in your sixties is hardly a thrilling nomadic existence. And when you can see it coming from the vantage point of your forties and fifties, these thoughts will continually prey on your mind.

A recent report suggested young professionals could give up certain luxuries in order to accumulate enough capital to form a substantial deposit. The deposit for a London property is approaching £80,000 or £90,000. Taking the average annual salary of £26,000, minus rent, the average person would be in their forties by the time they got a foothold on the ladder. The report suggests that a foothold might be more quickly established if nights out, takeaway sandwiches and coffees were forgone, among other expensive luxuries like cigarettes. But it would be difficult to live a life that seems devoid of any entertainment, even though it may be a sacrifice the first time buyer may have to make.

The difficulty with reconciling what one wants from life with what one can afford is one of the difficulties we all have to overcome. Young people have aspirations of how they would like their lives to turn out, and aspirations of lifestyle that they have to manage. But perhaps the notion of doing without luxuries for a few years is a step too far, and those that have their eyes on the gulf between house prices and salaries have decided they cannot bridge the gap, or commit to closing the gap, and have decided to enjoy life and all its luxuries while they can.

The divergence between salaries and house prices has also inadvertently fuelled another trend. This trend is the currency of hope. Young professionals, unfortunately, are increasingly seeking an outlying factor to help them expand their savings enough to meet their dream property. An outlier is an event that lies outside traditional empirical data, what might call a one-off that defies evidence. An example of an outlier might be a lottery windfall. There is no past evidence that points towards a future win, but when it happens suddenly a sudden restructuring of the status quo results. Another outlier is perhaps an inheritance; a sudden unexpected sum of money would help make up the gap for a deposit. First time buyers are relying also on parental help. But there is also an increasing number of young professionals who are turning towards reality television, singing competitions and all kinds of sudden fame in the hope that it would suddenly lift them out of the existing situation, and provide some additional financial boost into their dream one.

Are others relying on property as their hope?