Yearly Archives: 2015

Buy to let stamp duty to increase – initial thoughts

So George Osborne has decided to add an extra 3% stamp duty charge on second home purchases. The idea being that this move will bring some much needed cash the Government’s way and it should slow down the buy to let frenzy which in turn will enable individuals to purchase homes to live in. The theory here is that better-positioned buy to let landlords have been snapping up all the ‘first time buyer’ type properties to rent out thus meaning that there is nothing left for first time buyers to buy. There also seems to be a theory that buy to let has pushed housing prices up to beyond the reach of many first time buyers. I’m not convinced…

Let’s take the first point – landlords have been snapping up all the buy to let property because of their favourable position over first time buyers – I don’t really see why a landlord would necessarily have any advantage over any first time buyer. In fact, I think the first time buyer has several advantages over a landlord. For starters, a buyer looking to take out a residential mortgage (rather than a buy to let mortgage) will have access to much lower rates and almost certainly higher loan to value products. This instantly means their mortgage costs will be lower, they won’t need as big a deposit and may be able to borrow more than their landlord competition. How is a landlord in a better position to purchase a property than a first time buyer? I accept that landlords will tend to hold onto property once purchased and therefore this takes the house/flat in question off the market and means someone else can’t buy it but increasing stamp duty for future purchases isn’t going to help here. Anyone with a portfolio of properties is even more likely to hold onto them going forward, since selling one to buy another will result in a large tax bill. And yes, the number of potential landlords trying to buy means more competition for other buyers but again, I can’t see that increasing stamp duty is going to stop landlords from buying. It might put the odd one or two off but most will just consider the extra cost an irritation.

What about BTL pushing up house prices? Well, in the south east where I live, it certainly isn’t BTL which is forcing prices skyward, it is the London effect. Prices in London have risen dramatically in recent years largely because of foreign investment. Many property owners in London are now having their eyes opened to the fact that if they sell their two bedroom central London flat, they can use the money to buy a substantial detached house with grounds less than an hour from town. It’s a no-brainer and estate agents are wise to it (obviously). I have spoken to several agents in recent months who have admitted that they have properties listed for in excess of £1m when they are really only worth £750k/£800k but they know there is a good chance that a London buyer will see them as an absolute bargain at £1m+. You think that BTL landlords are pushing prices up? They may have a small impact on pricing but they certainly aren’t the main culprits in my opinion.

In the short term, I see house prices increasing, certainly for properties up to around £300k, as landlords try to get the deals through before the April deadline. That won’t help first time buyers one bit. After April things will settle down but, as I’ve already said, I doubt that a bit of stamp duty will put career landlords off – it’s just an additional cost of doing business which will need to be absorbed and, ultimately, passed down the line in the form of higher rents. I’ve seen many comments online since the changes were announced saying that it serves landlords right and that people shouldn’t be allowed to own more than one home, it’s not fair etc. At the end of the day, if an individual has earned the money to be able to buy an investment property, why shouldn’t he/she be allowed to do so? I saw one individual comment that you shouldn’t be able to make a profit on something which is basic human right (a home). Are we going to stop the supermarkets selling food for a profit then or the water companies selling their product at a premium? No of course not. Many new landlords are merely trying to secure their financial future in a time of low interest rates and poor pensions. Property is just an alternative form of investment which, in the past, has done very well over the long term.

Annoyingly, it is the small/medium sized landlords/investors which will be hit by this change. Corporates with more than fifteen properties in their portfolio won’t be affected. Surely if the BTL market is doing so much damage, these are the very people/businesses who should be paying the highest price, not being let off completely? It would seem that the view is that ‘corporate’ landlords are helping the Government with their housing problems and should be assisted whereas smaller, private landlords are not.

Escape of water 6 – summary

This is the sixth in a series of articles which document the procedure/process following a burst water pipe and the subsequent insurance claim. I decided to write the articles following such an event in my house and being unable to find much in the way of useful information online. Hopefully, in time, the search engines will pick these articles up and if you are unfortunate enough to suffer a similar event, my experience might give you some idea of what to expect. The first article in this series can be found here.

So, some eight months since a pipe burst in my loft and flooded my house, I got my property returned to me, fully repaired and basically like a brand new home. If you are reading this because something similar has happened to your house and you have no idea what will happen with the insurance claim and so on, the following tips might help guide you through a, frankly, pain in the backside time…

One of the first things that will happen with any reasonable-sized claim is that a loss adjuster will visit you. A loss adjuster’s job is to ensure that the claim is settled fairly and within the terms of the policy. He/she is also tasked with identifying and reporting fraudulent or suspicious claims. If you have nothing to hide, the loss adjuster, in my experience at least, is your friend. He isn’t there to try and talk down your claim – far from it – in my case he actually told me about some things I could claim for that I wasn’t even aware of! In other words, he effectively increased the size of the claim. Although the loss adjuster is employed by the insurance company, he/she should act impartially, which means you should end up getting exactly what you are entitled to. Make a friend of your loss adjuster – he isn’t the enemy and if you have considerable damage like I did, you will have to liaise with him on a regular basis so it makes sense to make the effort to get on. In my case, this was easy because the loss adjuster assigned to my case was a genuinely nice guy who was also very knowledgeable and helpful.

Be prepared for the insurance claim and associated works to dominate your life for a few months. When I look back at 2015, the first eight months of the year were entirely dominated by my trashed house and chasing people, arranging appointments, working on the wreck and so on. Expect to do a lot of telephone chasing – most of the people involved in the insurance and building industry seem to be extremely busy all of the time and you will need to constantly chase things to make sure progress is made. This is frustrating and will, at times, feel like you are banging your head against a brick wall but keep going, it will get done eventually!

Get yourself into rented accommodation as soon as possible. Your insurance company should arrange this if your property is uninhabitable. I tried living in a hotel (which I thought would be fun) and this soon gets boring and expensive (even with the insurance co paying for the room). I also put on a load of weight because I couldn’t cook my own meals. I have no idea how this would have worked if I had a ‘normal’ job or a family with me.

Finally, keep reminding yourself that you will get to the end of the claim/repairs eventually and you will very quickly forget about all of the hassle and stress. I’ve been back in my house for a couple of months now and it’s been quite fun spending the insurance money on new furniture etc. Plus my house is in great shape and has some nice new touches which wouldn’t have been there had the pipe not burst. I’m not saying it was worth going through the experience in order to get a few new doors – far from it – but I’ve almost forgotten the frustration, irritation and stress of the whole affair and I am left with a shiny new house for my trouble!

Escape of water 5 – repairs (at last)!

This is the fifth in a series of articles which document the procedure/process following a burst water pipe and the subsequent insurance claim. I decided to write the articles following such an event in my house and being unable to find much in the way of useful information online. Hopefully, in time, the search engines will pick these articles up and if you are unfortunate enough to suffer a similar event, my experience might give you some idea of what to expect. The first article in this series can be found here.

Repairs to my flooded property eventually started in May 2015, almost five months since the original burst pipe incident. The first thing to be done was to reinstate the first floor flooring so that it was possible to access this level. Next the partition walls on the first floor had to be rebuilt as the original ones had all been removed due to water damage. Ceilings throughout the property were replaced and first fix electrical/plumbing work was carried out, ready for the huge amount of plastering which needed to be done.

While the plasterboard walls and ceilings only needed a skim coat of plaster, there were a lot of breeze block walls which needed a bonding coat of plaster and then a skim coat. Basically the bonding coat is a much thicker layer of plaster which goes on first. The plastering took several weeks to complete in the end but as the bricks were slowly covered up, so the building started to look a bit more like a home again.

With the plastering finished and dry, so begin the next stages of the process: door frames, architrave, skirting board, second fix electricals and plumbing and coving and ultimately decorating and flooring, doors and finishing touches such as curtain poles etc.

When I originally met with the contractor to discuss the work required, he quoted me a timescale for the repairs of six weeks. I’ve been involved with enough refurbs over the years to know that you have to at least double an estimate like this! In the end, from the start of the repairs to the finish took a little over three months (so doubling it was almost spot on!) By this time, I really wasn’t bothered if things took a bit longer – much better to have everything done properly than rushed. I can’t speak highly enough of the guys who worked on my house and everything was done to an extremely high standard and nothing was too much trouble. In the greater scheme of things, a few extra weeks really were neither here nor there, especially when you are talking about a total time from flood to finish of eight months.

Latest book now available!

distinctly-average-entrepreneur-642x1024When I started writing ‘Distinctly Average Entrepreneur’ last year, it was my intention to have it written, edited and published by Christmas (last Christmas). That didn’t happen. I set a new target date for Easter but a burst pipe and subsequent trashing of my house meant that I missed that deadline too. But I’m pleased to announce, that just six or so months after my intended publication date, ‘Distinctly Average Entrepreneur’ is now available for purchase…

The book is a kind of humorous business biography and covers numerous entrepreneurial ventures undertaken by me, my mum and one of my best friends. It certainly isn’t a boring business book and I think that anyone interested in business should find something of interest. There are plenty of business failures, as well as quite a few success stories. I’ve also included a few tips and hints which should help any budding entrepreneur along the way.

DAE was an enjoyable book to write as it reminded me of the sheer number of business ideas I have tried over the years. Like most entrepreneurs, it wasn’t just a case of rolling out one idea and making an instant fortune (actually I’m still waiting for the fortune to arrive but if you read the book, you will see that I am less focused on this aspect of business nowadays).

Anyway, you can find out more about ‘Distinctly Average Entrepreneur’ by clicking here. The book is available from Amazon in both Kindle and paperback versions. Enjoy!

Escape of water 4 – quotes and schedule of works for repairs

This is the fourth in a series of articles which document the procedure/process following a burst water pipe and the subsequent insurance claim. I decided to write the articles following such an event in my house and being unable to find much in the way of useful information online. Hopefully, in time, the search engines will pick these articles up and if you are unfortunate enough to suffer a similar event, my experience might give you some idea of what to expect. The first article in this series can be found here.

My last update ended with the property having been stripped out and in the process of drying. Drying the house took around three and a half months and during this time, not a great deal happened. I visited the property every couple of days to empty the dehumidifier containers and hassled the insurance company/contractors etc to get whatever they needed in order so that once dry, they could crack on with the repairs as soon as possible. It was a frustrating period because there isn’t really anything that can be done until the building is dry so it is just a case of being patient but I’m not very good at that. Someone from the drying company visited every couple of weeks to check the humidity levels but until they get down to a reasonable level (about 20% from memory), no building work can commence.

Around the three month mark, the insurance company’s contractor arranged an appointment to visit my house to draw up a quotation and schedule of works. By this time the property was almost dry enough for repairs to start. The appointment took an hour or so and basically involved walking round the sad looking building while making a list of everything which needed doing. The contractor then drew up a quote and sent it over to the insurance company for approval. I was given the option of using my own contractors if I so wished and the insurance company would have just paid me out on their quote (assuming it was reasonable) and it would have been up to me to oversee/manage everything. In the end, I decided to use the approved contractor as I wouldn’t have to get involved with paying them and I had someone to go back to if there was a problem (the insurance company). If I had employed my own contractor and there had been any issues then I doubt the insurance company would have wanted to get involved. The only exception I made here was to use my own plumber and electrician and this was simply because I knew someone I could trust/rely on. For all of the plumbing/electrical work, I settled the bills myself and the insurance company paid the money to my bank account once I sent a receipt to them.

By this time, I had also moved into rented accommodation, having become completely fed up with living in a hotel. Not being able to cook for over two months meant that I put on about a stone in weight and I didn’t want this to turn into two or three stone by the time I eventually got back to my house. The insurance company initially paid for me to rent a studio apartment and then a two bedroomed house.

There were more delays once the building had been certified as dry as the contractor is not allowed to do anything until a formal ‘dry certificate’ has been issued. Despite me chasing this on an almost daily basis, it took about three weeks for this to be produced. Unfortunately, at times, it did seem like the only person in a rush to get things repaired was me.

Because of the size of the quote (in excess of £50k), the insurance company advised me that it would be normal practice for them to put the job out to tender. This would create a further delay of around two months while additional quotes were submitted, considered and ultimately approved. Fortunately, because of the amount of work I had done on the property in January, the insurance company representative agreed that they would go with the quote of their contractor rather than cause additional delays. This was a huge relief as otherwise there would just have been yet another period of time when nothing was happening.

It is worth mentioning that, if you find yourself in a similar situation and have changes/improvements you want to make to your property, this is the time to do it. I had a few minor, cosmetic alterations I wanted carried out so I discussed them when the contractor was drawing up his quote. The insurance company will pay out to put the building back the way it was but if you want to substitute some things with others, it might not necessarily cost you anything. Equally, if you want more expensive fittings etc, you will have the option of paying the extra yourself. I had quite expensive solid wood flooring downstairs and I opted to replace this partly with carpet and partly with Karndean flooring. This left a bit of cash spare and almost covered the cost of replacing my internal doors with smart oak veneer ones rather than the normal white painted panel doors.

Repairs eventually started in May, almost five months after the pipe had actually burst.