The Full English Accompaniment – New Build Property Warranties

What’s piqued my interest this week?

I learnt this week about another peril of buying a new-build home. One of the reasons people buy a new build is for the ‘peace of mind’ of having a home where everything is new, and if something should go wrong, it’s covered by a warranty. Most warranties are structured to provide ‘defects insurance’ to fix problems which emerge up to three years after the builder leaves site, and ‘structural insurance’, which usually covers from years three to ten (1, 2). The mortgage on your new build notes this, and like all other mortgages expects you to get your own home insurance as well (3, 4).

So what happens when the provider of your new build warranty goes bust? This is exactly what has happened with Alpha Insurance, who were declared in default last May (5). The cover continues to be provided, in some form, by the Danish Guarantee Fund, but that doesn’t help those trying to get a mortgage in the interim like one Reddit user (5, 6). The problem is that most lenders expect a valid new build warranty policy on new properties in order to lend. When the policy provider goes bust this can’t be evidenced. Finding a new provider is apparently a bit of a nightmare. Most policies are provided to large building firms via industrial providers (7, 8). If you’re not a building firm insuring an entire plots worth of houses you have to go to a specialist provider, who are more set up for self-build and one-off builds. These firms are more expensive, often require architects drawings, and may be unwilling to insure or warranty a property that’s already built (9, 10). This leaves the owner either unable to find a mortgage or forced to pay a hefty bill for a warranty that covers thing theirs home insurance already protects.

A niche issue perhaps, but when combined with the number of articles in the news lamenting the shoddy build quality of new homes, I’m sworn off buying a new build. Not a month goes by where articles advise on the merits of snagging surveys, and dubious construction practices (11, 12). Others report on owners issues trying to actually sort snags out, and homebuilding firms putting money aside to repair their own errors (13, 14). As always, do your own research and go in with your eyes open.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (now affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/new-home-warranties-cover/
  2. https://www.gocompare.com/home-insurance/new-builds/
  3. https://www.telegraph.co.uk/insurance/home/20-home-insurance-traps-and-how-to-avoid-them/
  4. https://www.citizensadvice.org.uk/consumer/insurance/insurance/types-of-insurance/buildings-insurance/
  5. https://www.fscs.org.uk/what-we-cover/insurance/alpha-insurance-as-declared-bankrupt/
  6. https://www.reddit.com/r/UKPersonalFinance/comments/apglf3/alpha_insurance_default_cannot_remortgage_savings/
  7. https://www.cml.org.uk/consumers/buying-a-home/new-build/
  8. https://www.pbctoday.co.uk/news/building-control-news/all-you-need-to-know-about-structural-warranty/41840/
  9. https://www.fmbinsurance.co.uk/insurance-products/new-homes-insurance-build-assure/
  10. https://c-r-l.com/what-we-cover/structural-insurance/
  11. https://www.which.co.uk/money/mortgages-and-property/new-build-homes/snagging-surveys-apxu15x04s1j
  12. https://www.theguardian.com/money/2019/feb/02/new-build-homes-why-some-owners-are-left-feeling-the-cold
  13. https://www.ftadviser.com/mortgages/2018/05/10/mortgage-lenders-soothe-fears-over-new-build-issues/
  14. https://www.bbc.co.uk/news/business-46302905
  15. https://www.theguardian.com/environment/2019/feb/10/plummeting-insect-numbers-threaten-collapse-of-nature
  16. https://www.propertywire.com/news/uk/falling-house-prices-means-property-investment-is-less-attractive-new-analysis-suggests/
  17. https://www.theguardian.com/society/2019/feb/11/study-links-heavily-processed-foods-to-risk-of-earlier-death
  18. https://www.bbc.co.uk/news/business-47200688
  19. https://www.bbc.co.uk/news/business-47224913
  20. https://www.theguardian.com/environment/2019/feb/12/electric-cars-already-cheaper-own-run-study
  21. https://www.parliament.uk/business/news/2019/february/royal-assent-tenant-fees-bill-signed-into-law/
  22. https://moneyweek.com/501682/pensions-drawdown-disaster/
  23. https://www.theguardian.com/business/2019/feb/14/renewable-energy-world-power-source-bp
  24. http://www.cityam.com/273176/starling-banks-75m-funding-round-merian-global-investors
  25. https://www.bbc.co.uk/news/business-47251465
  26. https://www.theguardian.com/business/2019/feb/08/risk-of-global-recession-may-be-low-but-we-are-heading-for-slowdown
  27. https://www.theguardian.com/business/2019/feb/14/how-can-we-tax-the-footloose-multinationals
  28. https://www.theguardian.com/business/nils-pratley-on-finance/2019/feb/13/interserve-needs-a-plan-b-given-the-rebellion-over-its-current-plan
  29. https://www.fool.co.uk/investing/2019/02/10/thinking-of-investing-in-these-neil-woodford-ftse-250-stocks-read-this-first/
  30. https://www.theguardian.com/politics/2019/feb/09/william-keegan-nine-british-financial-crises-since-1967
  31. https://www.ukvalueinvestor.com/2019/02/ftse-100-dividend-valuation-and-forecast-for-2019.html/
  32. https://gentlemansfamilyfinances.wordpress.com/2019/02/13/how-to-put-out-a-fire-use-liquidity/
  33. https://gentlemansfamilyfinances.wordpress.com/2019/02/12/early-redundancy-lessons-from-lifes-veterans/
  34. https://gentlemansfamilyfinances.wordpress.com/2019/02/15/if-i-lost-everything/
  35. https://thesavingninja.com/if-you-lost-everything/
  36. https://youngfiguy.com/wiped-out/
  37. http://quietlysaving.co.uk/2019/02/15/thought-experiment-2/
  38. https://indeedably.com/restart/
  39. http://ditchthecave.com/fear/
  40. https://firevlondon.com/2019/02/15/ive-lost-everything-through-a-cyber-theft/
  41. https://financeyourfire.com/2019/02/15/thought-experiment-wiped-out/
  42. http://eaglesfeartoperch.blogspot.com/2019/02/calculating-portfolio-returns.html
  43. http://www.mrmoneymustache.com/2019/02/11/hanging-out/
  44. http://diyinvestoruk.blogspot.com/2019/02/my-global-index-funds-under-spotlight.html
  45. https://simplelivingsomerset.wordpress.com/2019/02/14/dutch-brexit-humour-from-outside-the-nuthouse/
  46. https://monevator.com/weekend-reading-29-quick-rules-about-money/
  47. https://indeedably.com/what-you-keep/
  48. https://lovelygreens.com/growing-tomatoes-from-seed/
Advertisements

The Full English Accompaniment – Are you ignoring the biggest risk?

What’s piqued my interest this week?

I bang on about it a lot, so I’ll make this post short. I’ve spent a lot of my working life treating people who are knocking on death’s door. That’s not just the old and the sick, but also people who have had the worst day of their life. They woke up thinking that day was going to be like any other, and they end up lying in the bed of A&E Resus. A lot of the themes of what they tell me come through that influential book, The Top Five Regrets of the Dying (1). TL:DR, the top five are:

  • I wish I’d had the courage to live a life true to myself, not the life expected of me
  • I wish I hadn’t worked so hard
  • I wish I’d had the courage to express my feelings
  • I wish I had stayed in touch with my friends
  • I wish I had let myself be happier (2)

Hard lines. Many echo in the motivations for early retirement, as we hope to reconnect with friends, find happiness and express our feelings in new hobbies and activities. At it’s core early retirement allows us to live a life true to our hopes, dreams and interests, and not based upon the expectations of the man.

All this post aims to do is to challenge the weightings mentally applied to the above. The trade-off made between working hard for the future, and enjoying the now. There is a temptation to work twice as hard to reach an early retirement future in half the time. That relies upon the certainty of your future. That certainty is a risk that needs to be thought about and managed, by taking care of yourself. Having a million quid in the bank is useless if you’ve given yourself scurvy by eating nothing but porridge and rice. I’ll end this with two short examples pulled from the Reddit vaults (3, 4):

Have a morbid great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (now affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

SowHow: A Modern Guide to Grow-Your-Own-Veg – Paul Matson & Lucy Anna Scott – I’ve been reading this in the evenings ahead of the sowing season. Simple, neat and effective in both design and instruction.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://amzn.to/2TOczPu
  2. https://www.theguardian.com/lifeandstyle/2012/feb/01/top-five-regrets-of-the-dying
  3. https://www.reddit.com/r/financialindependence/comments/8vwc8l/consider_that_you_might_never_enjoy_your_nest_egg/
  4. https://www.reddit.com/r/FIREUK/comments/amfmuv/ahso_ive_been_mitigating_the_wrong_risk/
  5. https://www.which.co.uk/news/2019/02/starling-launches-euro-currency-account-could-it-save-your-cash-from-brexit/
  6. https://www.bbc.co.uk/news/av/uk-politics-47164882/what-would-you-do-if-you-were-financially-independent
  7. https://www.theguardian.com/business/2019/feb/07/bank-of-england-holds-interest-rates-cuts-growth-forecast
  8. http://www.bbc.co.uk/news/business-47155145
  9. https://www.theguardian.com/money/2019/feb/07/uk-house-prices-fall-in-january-as-brexit-puts-off-buyers
  10. http://www.bbc.co.uk/news/business-47133564
  11. http://www.bbc.co.uk/news/business-47068401
  12. https://www.physicianonfire.com/fire-movement/
  13. http://diyinvestoruk.blogspot.com/2019/02/a-look-at-green-bonds.html
  14. https://youngfiguy.com/just-because-you-can-doesnt-mean-you-should/
  15. https://www.ukvalueinvestor.com/2019/02/n-brown-dividend-cut.html/
  16. http://eaglesfeartoperch.blogspot.com/2019/02/high-yield-portfolio-whats-in-name.html
  17. https://cashflowcop.com/my-stone-of-life/
  18. https://theescapeartist.me/2019/02/05/work-bitch/
  19. https://www.msziyou.com/net-worth-updates-january-2019/
  20. http://www.retirementinvestingtoday.com/2019/02/managing-retirement-drawdown.html
  21. https://ditchthecave.com/january2019update/
  22. http://www.thefrugalcottage.com/dividend-income-january-2019/
  23. https://firevlondon.com/2019/02/03/january-2019-many-happy-returns/
  24. http://quietlysaving.co.uk/2019/02/02/january-2019-plus-other-updates-2/
  25. https://drfire.co.uk/investment-strategy/
  26. https://indeedably.com/shortcut/
  27. https://monevator.com/low-cost-index-trackers/
  28. https://monevator.com/find-the-best-online-broker/
  29. https://monevator.com/is-capitalism-in-crisis/
  30. https://firethe9to5.com/2019/02/03/its-official-i-fired-the-9-to-5/
  31. https://lovelygreens.com/create-wood-chip-garden-paths/
  32. https://sharpenyourspades.com/2019/02/04/incredible-crops-im-growing-in-2019-vital-seeds/

The Financial Dashboard – January 2019

The goals for January were:

  • Sell five more childhood toys. Sell five more car parts – Failure
  • Develop a single spreadsheet for all my financial data/ graphs etc – Success
  • Finish my Investment Strategy Statement – Success
  • Check our household green credentials – Success
  • Check utilities for potential savings – Success

Checking the assets and liabilities:

Assets

Liabilities

These are taken from my Beast Budget spreadsheet. This month my net worth grew by £867 (~3%), so that I’m now sitting just under £30k. It was a pretty poor month on the savings front with no overtime or extra shifts, the added expense of a holiday and the GMC and Royal College both deciding to take their pound of flesh. I’ve saved another £200 on my 5% Santander saver, and started paying down our wedding loan to a family member, but the Royal College bill went on the credit card (slap on wrist) nudging my debt up. February will also be lean as I start a new job and wait for a new payday. Luckily my new pay should be a fair bit more thanks to the vagaries of the NHS. Got to love a nationalised monopoly!
Goals:
Goal failed: Sell five more childhood toys. Sell five more car parts

I continue to fail here, and I wonder if that’s because I’m trying to sell lots of unusual oddments and expecting everyone else to want my old shit. I have gradually increased the amount of stuff listed on eBay, and have sold ~£20 quid worth of kit. I’ve also braved Facebook and Gumtree, with some success. I’m going to change this for next month and make it a more achievable sell £50 worth of stuff.
Goal achieved: Develop a single spreadsheet for all my financial data/ graphs etc

I’ve streamlined our various household spreadsheets into a new, improved Beast Budget, adding some new functions and graphs at the same time.

Jan Net Worth

Jan Credit Card
Goal achieved: Finish my Investment Strategy Statement

Now complete and to be found here.
Goal achieved: Check our household green credentials

This was a really interesting exercise, and exposed where I’m lying to myself in my bourgeois way. I ran our household information through the WWF Carbon Footprint calculator (1).

Carbon Footprint

Oh dear. Where’s it all going?

Breakdown

Ah. Breaking it down:

Home – We’re doing pretty well. Our energy is supplied by Bulb (message me for a £50 referral bonus), which is 100% renewable electricity and 10% renewable (bio)gas. All our lightbulbs are LED, our boiler is old but regularly serviced, our white goods are low-energy and the whole house is well insulated with double glazing etc.

Stuff – We don’t buy much in the way of clothes or consumerist claptrap, and I think this is mainly raised by the fact we bought new appliances when moving into our house.

Food – We’re doing reasonably here too. We eat meat three or four times a week, but I want to get this down to two. We eat a varied seasonal diet from local organic sources, and I want to grow and preserve more at home.

Travel – Oh bugger. This’ll be the (count ’em) four short haul, four medium haul and two very-long haul flights we’ve made in the last year. Seriously bad for the environment and won’t be doing that in 2019! I also need to get my bike serviced and start using it for local journeys.

This has been useful enough as an audit exercise that I’m going to check my progress quarterly for 2019 to see how I get on improving matters.
Goal achieved: Check utilities for potential savings

I try to check for potential savings every 3-6 months. Uswitch and MoneySavingExpert reckon we can save £45 over the year if we switch to EDF, Lumo or Octopus (2). I’m really happy with the customer service with Bulb (fanboi), and I’m willing to suck up £45 to know my energy is coming from renewable sources. Our previous Plusnet connection went from £27 to £38 in December, so I called their retention department who couldn’t match Virgins 100mbp for £22/month offer. We’ll wait and see whether the reality matches the quoted service.
Budgets:

  • Groceries – Budget £300, spent £185.03, last month N/A. We had lots of Christmas food left over, but happy with this!
  • Entertainment – Budget £300, spent £97.30, last month N/A. Going to look into entertainment spending this month.
  • Transport – Budget £460, spent £103.12, last month £233.69. Remarkably little this month, but MOTs and tuning costs loom.
  • Holiday – £150, spent £133.09, last month £0. Went skiing, fully catered chalet kept £ costs low and moods high.
  • Personal – £50/ £0/ £0
  • Loans/ Credit – £350/ £400/ £556.67. Upped payments to credit cards now.
  • Misc – £50/ £30/ £20.

In the garden:

I’m mid-way through building the raised beds and I’ve prepared the greenhouse ready for seedtrays next month. The raised beds are 2 foot high (to ward off carrotfly) and constructed from old pallets I’ve scavenged with tanalised upright supports. I’m collecting a load of free topsoil found on Gumtree next week to fill them up and then they should be ready for planting.

Goals for next month:

  • Sell £50 worth of stuff
  • Calculate and set a budget for Entertainment
  • Reduce consumption of single use plastics
  • Finish the raised beds
  • Set up an account with an investment platform

What’s in the pipeline:

  • Stoicism, Ascetism and the modern world
  • Property Renovation Lessons Part III
  • Frugal Motoring – Should I buy a Hybrid?
  • Plus the usual Full English Accompaniments and other drivel…

Happy February everyone,

The Shrink

References

  1. https://footprint.wwf.org.uk/
  2. https://www.moneysavingexpert.com/utilities/you-switch-gas-electricity/

The Full English Accompaniment – No-deal Brexit will cure obesity

What’s piqued my interest this week?

Bear with me.

Are you ready to starve?

Is basically the sensationalist headline that’s been flying around in various forms in response to our governments arse-covering. Pretty much all the major supermarkets have warned a no-deal Brexit will bring food security issues and provision to UK supermarkets will be… spotty (1, 2, 3, 4, 5). Remember the #courgettecrisis of ’17 caused by crap Spanish weather (6).

The argument from the Brexiteers is that we should grow our own, in some sort of dig-for-victory rose-tinted halcyon view of post-war Britain. Has anyone explained that crops take time to bloody grow? And the reason the UK became so reliant during WW2 on home-grown produce was food scarcity and rationing? They’re not going to be able to magic up the tomatoes for your £1.99 own-brand high-salt high-sugar pepperoni pizza out of Morris the pensioners’ greenhouse in Didcot.

Knock-on effects of no deal Brexit are no more cheap fruit, veg, meat and processing from the continents fields and factories (7). The price of food will rise. We already have it bloody good compared to the rest of the world. The average UK household spends 8% of it’s earnings on food a year. Compare that to the rest of Europe where it’s more like 10-15% (8).

This is thanks in no small part to cheap imports and the competition between the big supermarkets. They’ve squeezed every inch out of overheads as they’ve grown to maximise profits, with vast supply chains that have taken years to develop. Even then their headline figures are minimal. Check out this chart I pinched from Reddit for Tesco, which has their net profit at a shade under 1.5%:

They can’t soak up wholesale food cost rises. It has to go the consumer. The range of food available will decrease to be more seasonal, and the price will go up to reflect the more expensive supply chain. There’s no need for a bloody sugar tax, Brexit will do that for us (9, 10).

So who are going to be affected as food prices go up?

Well the working class, or should I say those in lower socioeconomic classes, who disproportionately voted to leave (11). Because you have to buy cheaper food, and cheaper food is made with more sugar, more salt, more industrially produced refined products to cover up the lack of actual food (12). Poorer people eat less varied diets consisting of more commercially grown produce imported to the UK. Processing means factories means mileage and countries crossed (13). It doesn’t have to be that way; a healthy varied seasonal diet can be cheaper. It just takes thinking about, time and effort (14).

Outcome of post-Brexit scarcity: either people eat more varied seasonal food because they have to, because that’s all that’s available; or they eat less of the high-sugar, high-fat, low-fibre processed shite that is associated with obesity etc, because it’s expensive (15, 16). The sloven stacking microwave burgers into their slack jaw can now only afford two rather than three at once. Both improve public health (17).

So maybe Brexit will solve one of the greatest ongoing public health crises, starve the nation and (by cost reduction) save the NHS. £350 million is a lot of ready meals.

I’m aware of the irony of this rant given the Full English title.

Have a great week,

The Shrink

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (now affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanitys’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.independent.co.uk/news/business/news/no-deal-brexit-uk-food-security-risk-sainsburys-asda-waitrose-supermarkets-a8750466.html
  2. https://www.fcrn.org.uk/research-library/food-security-uk-post-brexit-view
  3. https://www.bbc.co.uk/news/business-47028748
  4. https://foodresearch.org.uk/publications/feeding-britain-food-security-after-brexit/
  5. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/557993/AUK-2015-05oct16.pdf
  6. https://www.bbc.co.uk/news/uk-38666752
  7. https://www.bbc.co.uk/news/business-39030755
  8. https://www.bbc.co.uk/news/business-45559594
  9. https://www.bbc.co.uk/news/health-46736124
  10. https://www.bbcgoodfood.com/howto/guide/jack-monroe-talks-sugar-addiction-child-poverty-and-gives-her-views-sugar-tax
  11. https://www.ncbi.nlm.nih.gov/pubmed/23846088
  12. http://glopan.org/sites/default/files/ForesightReport.pdf
  13. https://www.eta.co.uk/environmental-info/food-miles/
  14. https://www.independent.co.uk/life-style/health-and-families/features/healthy-eating-cheap-cost-unhealthy-food-obesity-diabetes-poverty-a8535701.html
  15. https://www.nutrition.org.uk/nutritioninthenews/headlines/ultraprocessedfoods.html
  16. https://www.theguardian.com/science/2018/feb/02/ultra-processed-products-now-half-of-all-uk-family-food-purchases
  17. https://www.bmj.com/content/364/bmj.l296
  18. https://www.theguardian.com/money/shortcuts/2019/jan/28/100-per-cent-mortgage-lloyds-is-it-worth-risk
  19. https://www.autoexpress.co.uk/car-news/105814/uk-firm-launches-public-ev-chargers-embedded-into-kerb
  20. https://www.theguardian.com/business/2019/feb/01/tsb-computer-meltdown-bill-rises-to-330m
  21. https://www.theguardian.com/business/2019/feb/01/decline-in-quality-auditors-face-scrutiny-over-string-of-scandals
  22. https://www.bbc.co.uk/news/business-47085479
  23. https://www.bbc.co.uk/news/business-47086920
  24. https://www.which.co.uk/news/2019/02/new-best-savings-rate-launches-are-instant-access-accounts-looking-up/
  25. https://www.imperial.ac.uk/media/imperial-college/administration-and-support-services/enterprise-office/public/Table-of-Disruptive-Technologies.pdf
  26. https://indeedably.com/i-own/
  27. https://indeedably.com/reentry/
  28. https://thesavingninja.com/minimalism-part-2-clothes-clothes-everywhere/
  29. https://ditchthecave.com/networking/
  30. https://www.msziyou.com/msziyou-turns-one/
  31. https://simplelivingsomerset.wordpress.com/2019/01/29/100-mortgage-backed-by-bomad-ive-seen-this-movie-before-it-didnt-end-well/
  32. https://simplelivingsomerset.wordpress.com/2019/01/31/will-the-last-uk-finance-blogger-please-switch-off-the-lights-on-their-way-to-twitter/
  33. http://thefirestarter.co.uk/should-i-stay-or-should-i-go-plus-introducing-tfs-merch/
  34. http://www.thefrugalcottage.com/january-2019-a-month-in-review/
  35. https://littlemissfire.com/de-clutter-and-reselling-update-2019/
  36. https://littlemissfire.com/our-future-goals-2019-and-beyond/
  37. https://youngfiguy.com/my-investing-journey/
  38. https://monevator.com/who-are-you-kid-ing-understanding-the-ongoing-charge-figure-of-an-investment-trust/
  39. https://www.mrmoneymustache.com/2019/01/28/how-to-slow-down-time-and-live-longer/
  40. https://gentlemansfamilyfinances.wordpress.com/2019/01/29/6-top-tips-for-millennials-to-solve-the-property-puzzle/
  41. https://gentlemansfamilyfinances.wordpress.com/2019/01/31/tax-return-completed/
  42. https://gentlemansfamilyfinances.wordpress.com/2019/02/01/month-end-accounts-january-2019/
  43. https://www.ukvalueinvestor.com/2019/01/risk-of-corporate-debt.html/
  44. https://www.ukvalueinvestor.com/2019/01/investing-in-turnarounds-recovery-stocks-and-corporate-transformations.html/
  45. https://firevlondon.com/2019/01/27/declaration-of-financial-independence/
  46. https://theescapeartist.me/2019/01/26/how-to-have-a-great-day/
  47. http://eaglesfeartoperch.blogspot.com/2019/01/new-high-yield-group-within-sipp.html
  48. http://quietlysaving.co.uk/2019/02/02/january-2019-plus-other-updates-2/
  49. https://www.visualcapitalist.com
  50. https://agentsoffield.com/2019/01/20/new-year-new-challenges/
  51. https://sharpenyourspades.com/2019/01/19/11-must-grow-vegetables-in-2019-allotment-gardeners-reveal-their-favourite-crops/
  52. https://sharpenyourspades.com/2019/01/31/10-highlights-from-the-grow-your-own-blogs-january-2019/
  53. https://www.jackwallington.com/my-allotment-plan-for-2019/

Investment Strategy Statement – Part 4 – Accounts, Funds, Taxes & Rebalancing

Wrapping up my ISS with the mechanical stuff.
Taxes

Exploit tax-free allowances where possible

MrsShrink and I are both UK resident fully compliant UK taxpayers. 2018/19 I have been on the cusp of higher rate tax, and will need to review once I get my year end P60 for the three (actually sort of four) jobs I’ve been on PAYE (1). From 2019/20 onward it looks like I’ll be in the higher rate 40% bracket.

I plan to exploit four tax-sheltering methods:

1. Interest from cash savings and emergency funds will stay within my Personal Savings Allowance

This latest weapon in the public’s tax armory allows for £1,000 tax-free savings for basic rate tax payers and £500 for higher rate (2, 3). Interest from our high interest current accounts holding our cash emergency fund will aim to be held within this limit.

2. Filling up ISA allowances

Once our emergency fund is topped off we will contribute to ISAs (4, 5). In the short term all my stock market purchases will fit within the £20k/year wrapper (6). MrsShrink is likely to use Cash ISAs (7). We will utilise the Marriage Allowance if such circumstances arise (8).

We are considering using LISAs as well, but their benefit appears limited to the government bonus (9). We’re not first time buyers, so such an account would be for the long-haul and intended to supplement our income post-60. They’re a complex product and I’m not sure I’m happy with the lack of flexibility, so this will be another area to think about in the future (10).

tax efficiency

3. Pensions Contributions

I will maximise my tax relief on my pension contributions. I’m in the enviable position of having pensions held in two of the most generous funds left in the country; the NHS Pension Scheme and the Universities Superannuation Scheme. Both are sort of defined benefit schemes. The NHS Pension Scheme functions as a career average revalued earnings (CARE) scheme (11). The USS is a hybrid defined benefit and contribution scheme, where DB is paid on salaries up to £57,216.50 and DC over that figure (12, 13). I will detail both schemes in separate future posts. I shouldn’t really have both (this has happened due to some HR oddness) and so I need to sit down and unpick. The complexities of my professional life mean that I am likely to be bouncing between services for the foreseeable future, so this will remain a headache.

The secondary headache in this is that both pensions may be hard up against the lifetime allowance cap (14, 15). As a defined benefit scheme my NHS pension is multiplied by 20 and added to any lump sum to give a capital value (16). Many of my senior colleagues have been hit with substantial (five-figure) unexpected tax bills since the reduction in the lifetime allowance. It’s therefore not clear to me yet if making further contributions will be tax effective, or which pension scheme will be the most advantageous for a potential early retirement (17, 18, 19, 20). A matter for future reading.

4. Other investment structures

Longer term areas of interest:

  • Venture Capital Trusts
  • Enterprise Investment Schemes
  • Seed Enterprise Investment Schemes (21, 22)
  • Premium Bonds (I dared to speak thy name!) (23, 24)
  • Property (25, 26, 27, 28)

Accounts and Funds

Split holdings across multiple providers and platforms to reduce risk

We will use the bank account savings website (or similar if superseded) to maximise returns on liquid cash holdings (29). This will be split across multiple accounts to remain within the FCSC £85,000 limit (30). Tax-free accounts will be the preferred method for holding passive equities, bonds and stock.

Assets will be allocated across investment accounts to reduce costs, provide further security and reduce platform risk (31, 32). Initially I will aim to keep investments within the £50,000 FCSC protection limit (33). As stated in my ISS part 3, I intend to allocate ETFs across fund holders to meet allocation targets. No provider will hold more than 25% of my holdings after year five (to give me time to actually build the damn thing up!).
Rebalancing

Rebalance quarterly using Swedroe’s 5/25 through purchases

A basic tenant of my investment plan is to sell rarely, if ever. My stock purchases are for the long haul. Therefore I aim to check and buy back to allocation each quarter through purchases (34, 35). Boundaries for this are set using Larry Swedroe’s 5/25 rule; 5% absolute or 25% relative percentage variance (36). If this implicates selling I will wait until year end to optimise Capital Gains Tax. Allocations will be balanced annually against global markets plus my own weighting. On the active naughty step portfolio investments are free to do their own thing but will be re-evaluated against the overall portfolio yearly at the 10% stocks, 10% active target.

I’ll revisit this and update periodically, but for now that about wraps it up.

Take care,

The Shrink

References:

  1. https://www.gov.uk/income-tax-rates
  2. https://www.gov.uk/apply-tax-free-interest-on-savings
  3. https://www.moneysavingexpert.com/savings/personal-savings-allowance/
  4. https://www.gov.uk/individual-savings-accounts
  5. https://www.moneyadviceservice.org.uk/en/articles/isas-and-other-tax-efficient-ways-to-save-or-invest
  6. https://www.fool.co.uk/investing-basics/isas-and-investment-funds/stocks-and-shares-isas/
  7. https://www.fool.co.uk/investing-basics/isas-and-investment-funds/isa-basics/
  8. https://www.gov.uk/marriage-allowance
  9. https://www.fool.co.uk/investing-basics/isas-and-investment-funds/lifetime-isas/
  10. https://youngfiguy.com/why-the-lifetime-isa-is-not-a-simple-to-understand-product/
  11. https://www.moneywise.co.uk/managing-your-pension/pensions/the-lowdown-nhs-pensions
  12. https://www.imperial.ac.uk/human-resources/working-at-imperial/pension-schemes/uss—universities-superannuation-scheme/changes/pension-schemes-explained/
  13. https://www.uss.co.uk/members/members-home/the-uss-scheme
  14. https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance
  15. https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-lifetime-allowance
  16. https://www.bma.org.uk/advice/employment/pensions/lifetime-allowance
  17. http://www.legalandmedical.co.uk/3-reasons-to-have-a-pension-pot-that-is-over-the-allowed-limit/
  18. https://chasedeveremedical.co.uk/2018/02/22/beware-the-lifetime-allowance-charge/
  19. https://www.telegraph.co.uk/money/special-reports/should-i-retire-at-55-because-of-my-125m-nhs-pension/
  20. https://www.uss.co.uk/members/members-home/retirement-articles/2018/the-easy-way-to-keep-track-of-your-annual-and-lifetime-allowances
  21. https://www.moneyobserver.com/how-to-invest/how-to-invest-tax-efficiently-beginners-guide
  22. https://www.fool.co.uk/investing-basics/how-shares-are-taxed-2/tax-efficient-investing/
  23. https://www.moneysavingexpert.com/savings/premium-bonds/
  24. https://www.nsandi.com/premium-bonds
  25. https://www.moneyadviceservice.org.uk/en/articles/tax-and-property-investment
  26. https://www.out-law.com/topics/tax/property-tax-/tax-treatment-of-reits/
  27. https://www.investorschronicle.co.uk/tax/2017/08/31/how-farmland-is-taxed/
  28. https://www.whatinvestment.co.uk/how-to-invest-in-forestry-2134293/
  29. https://www.bankaccountsavings.co.uk/calculator
  30. https://www.fscs.org.uk/what-we-cover/
  31. https://www.bogleheads.org/wiki/Asset_allocation_in_multiple_accounts
  32. https://www.thisismoney.co.uk/money/experts/article-2553851/How-I-know-DIY-investing-platform-safe.html
  33. https://www.fscs.org.uk/what-we-cover/investments/
  34. https://www.investopedia.com/articles/stocks/11/rebalancing-strategies.asp
  35. https://www.bogleheads.org/wiki/Rebalancing
  36. https://awealthofcommonsense.com/2014/03/larry-swedroe-525-rebalancing-rule/

Full English Accompaniment – Is financial independence achievable by anyone?

What’s piqued my interest this week?

The above question appears to be a recurring theme in our little niche of the financial blogging community. High-profile, mainstream public-facing blogs like MMM and the Frugalwoods argue that anyone and everyone can potentially be financially independent and retire early, if they take the right steps (1). It’s great for selling the story and motivating potential readers, but to me it’s selling an impossible dream.

To explain let’s draw up some basic sums. The amount most people can save towards an early retirement can be defined as:

Amount saved = (Defined pension + take-home Earnings) – (Basic living + lifestyle Costs)

A = (D+E) – (B+C)

For the sake of simplicity we’ll ignore tax rebates, dividend payments, inheritance etc. I’m not even going to bother running this on a minimum wage. Instead we’ll start at the UK Living Wage, currently £9.00/hr (2). This is built on the Minimum Income Standard, which calculates the cost of the average basket of goods required for a household to afford an acceptable standard of living (3).

A 23 year old working a 37.5hr week on £9/hr that will see a yearly salary of £17,550. Plug that into a salary calculator, incorporating 8% pension contribution with an 8% employer match. That’s D and E. The Living Wage is based upon a minimum acceptable standard of lifestyle, so we’ll use that figure again for B, with £0 lifestyle inflation cost and we get (4):

A = ((£76.79 X 2)+£1214.81) – (£1214.81+£0)

How does that lifestyle cost compare? Well the average UK 1 bed flat costs £600, but that’s skewed by London’s ridiculous prices (5). Say instead you’re sharing or living in an area with cheaper housing, it’s more likely to be £400/month, this represents ~30% of your earnings and so if a fairly accurate representation given the UK average is 25% of earnings spent on accommodation (6). If you get can by on another £600/month for all other expenses then well done, you can save £215. Add in your generous pension contributions and you’re up to £365/month put aside for the future, or £4,380 annually. Run that number through a rough early retirement calculator and we get that you can retire in 33 years. So that’s early retirement at 56 for a lifetime spent in a one bed flat and minimum acceptable standard of living.

Not realistic? Lets work another example. Example 2:

30 year old earning median UK disposable household income (2017) of £27,300 (7). Same sums, same aggressive pension match, £1715.31 take home. This time our 30 year old has got bored of living in digs, and is instead renting a two bed new build in a LCOL area. £750/month for rent gets you access to homes in 67% of the UK, so compared to Example 1 you’ll pay £350 more/month (8). Your lifestyle has inflated a bit, but not much, just a few beers now and then, a better phone, a decent tv and slightly better food. Say £100/month? So, let’s punch that into our equations and calculators:

A = ((£141.79 X 2)+£1715.31) – (£1214.81+£450)

A = £334

Retire in 44 years

Ouch. That lifestyle inflation has hit hard. Your early retirement age is now 74. So what do you do? Cut back on the house size or go back to shared accommodation? Stop drinking and eat 7p basics noodles? We know that actually, due to the benefits from our taxation system and social support services, a moderate increase in income in the lower quartiles makes little difference to disposable income (available for savings). Lifestyle inflation at this end quickly gobbles up the extra earnings as you are now comfortable, not just-about-managing. Do you make yourself uncomfortable to retire early? That requires a special type of motivation (9, 10, 11).

You have to be a high earner to achieve the % savings rates required for early retirement without living uncomfortably in some way. Ignoring this fact is dreaming. Most people will not achieve early retirement without either lifestyle discomfort or a serious increase in their earning power. That’s FIREs dirty little secret (11). To say otherwise is to sell a dream.

I don’t think this is a bad thing.

Because the world is driven by soundbites and nicely packaged information, easily digestible and understandable. The majority of the FI blogs pitched to the mainstream do just that, make it easily digestible, understandable and relate-able. A cynic would argue it funds their early retirement through a customer-facing monetised website (12). But I’m not that cynic, this is a good thing, more people should be thinking about their money matters. The UK household savings ratio is currently stuck around 4%, and has been for several years (13):

capture

The financial choices required for early retirement are for everyone. 

The’ye just a good idea. Just by thinking about your finances you’re ahead of those ignoring their accounts. To crib my fellow medical colleague, the female money doc (14):

  • Know your numbers
  • Build assets
  • Get out of debt
  • Buffer it
  • Consider extra income streams

Anyone could achieve financial independence, but not everyone can. The effort can only be a good thing. No shame in trying!

Have a great week,

The Shrink

Side Orders

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading (now affiliate links):

Tombland – C.J. Sansom – I love the Shardlake series, detective novels set in the Tudor period with a crippled lead character. Beautifully written.

Food Of The Gods: The Search for the Original Tree of Knowledge: A Radical History of Plants, Drugs and Human Evolution – Terence McKenna – An ethnobotanist explores humanity’s’ fascination with hallucinogenics, and the role of altered states of consciousness on the development of human society.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.theguardian.com/money/2018/mar/08/how-to-retire-early-frugal-spending
  2. https://www.livingwage.org.uk/calculation
  3. https://www.lboro.ac.uk/research/crsp/mis/
  4. https://www.thesalarycalculator.co.uk/salary.php
  5. https://www.bbc.co.uk/news/business-46072509
  6. https://www.bbc.co.uk/news/business-44046392
  7. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2017
  8. https://www.bbc.co.uk/news/business-23234033
  9. https://www.thisismoney.co.uk/money/news/article-4110482/How-rich-Work-income-wealth-sits-UK.html
  10. https://www.financialsamurai.com/the-average-savings-rates-by-income-wealth-class/
  11. http://www.flannelguyroi.com/dirty-little-secret-early-retirement/
  12. https://theoutline.com/post/3840/frugalwoods-frugality-millennials?zd=2&zi=kjpt6k5u
  13. https://tradingeconomics.com/united-kingdom/personal-savings
  14. https://thefemalemoneydoctor.com/reach-financial-freedom/
  15. https://www.marketwatch.com/story/guid/FC86FC66-19DD-11E9-84BA-7B8C470F8CAB
  16. https://www.theguardian.com/money/2019/jan/17/uk-house-prices-fall-at-fastest-rate-in-six-years-on-back-of-brexit-rics
  17. https://www.gov.uk/government/news/uk-house-price-index-for-november-2018
  18. https://www.dailymail.co.uk/money/markets/article-6578873/Renewable-power-provider-Bulb-Energy-slumps-24m-loss-amid-squeeze-small-suppliers.html
  19. http://www.bbc.co.uk/news/business-46900918
  20. https://www.theguardian.com/environment/nils-pratley-on-finance/2019/jan/17/government-isnt-quite-ready-drop-obsession-with-nuclear-greg-clark-business-secretary
  21. https://www.theguardian.com/business/2019/jan/12/subprime-timebomb-back-companies-lighting-the-fuse/
  22. https://www.independent.co.uk/news/business/comment/metro-bank-profit-warning-new-branches-mortgages-challenger-banks-santander-uk-branch-closures-a8742301.html
  23. https://www.theguardian.com/environment/2019/jan/15/immediate-fossil-fuel-phaseout-could-arrest-climate-change-study
  24. http://www.bbc.co.uk/news/health-46865204
  25. https://www.theguardian.com/business/2019/jan/16/marks-spencer-selling-loose-fruit-veg-plastic-waste/
  26. https://www.bbc.co.uk/news/business-46793506
  27. http://www.bbc.com/future/story/20181217-the-best-time-of-year-to-x
  28. https://www.theguardian.com/technology/2019/jan/17/breached-data-largest-collection-ever-seen-email-password-hacking
  29. https://www.bbc.co.uk/news/business-46958560
  30. https://landlords.org.uk/news-campaigns/news/tenant-fees-bill-provisions-come-effect-june-2019
  31. https://www.express.co.uk/life-style/cars/1076669/kia-e-niro-car-of-the-year-electric-vehicle/
  32. https://www.theguardian.com/society/2019/jan/15/junior-doctors-working-past-shift-end-nhs-data-england/
  33. https://monevator.com/weekend-reading-the-house-that-jack-built/
  34. https://monevator.com/venture-capital-investing/
  35. http://www.frugalwoods.com/2019/01/18/this-month-on-the-homestead-burning-brush-and-the-life-and-times-of-firewood/
  36. http://www.frugalwoods.com/2019/01/25/hacked-sodastream-seltzer-reload-and-other-december-2018-expenditures/
  37. https://ournextlife.com/2019/01/14/one-year-adventures/
  38. http://www.retirementinvestingtoday.com/2019/01/2018-in-review-let-decompression.html
  39. https://monevator.com/the-pension-protection-fund-ppf/
  40. https://youngfiguy.com/patisserie-valerie-what-happens-now/
  41. https://youngfiguy.com/mrs-yfg-why-i-stay/
  42. https://youngfiguy.com/podcasts-like-buses/
  43. https://firevlondon.com/2019/01/20/avoiding-tax-in-the-uk/
  44. https://www.msziyou.com/2018-review/
  45. https://www.msziyou.com/2019-goals/
  46. https://ditchthecave.com/prioritisation/
  47. https://ditchthecave.com/marginal-gains/
  48. https://www.ukvalueinvestor.com/2019/01/why-i-sold-glaxo-dividend-yield.html/
  49. https://www.ukvalueinvestor.com/2019/01/thin-profit-margins-bad-investments.html/
  50. https://www.ukvalueinvestor.com/2019/01/capital-employed-growth-instead-of-earnings-growth.html/
  51. http://thefirestarter.co.uk/damp-squib-december-income-expenses-report/
  52. http://thefirestarter.co.uk/2018-review-plus-2019-goals-the-year-of-keeping-calm-and-carrying-on/
  53. https://theescapeartist.me/2019/01/17/what-to-expect-when-youre-expecting/
  54. https://thesavingninja.com/how-to-work-in-the-city-on-a-budget/
  55. http://quietlysaving.co.uk/2019/01/17/changes-afoot/
  56. http://diyinvestoruk.blogspot.com/2019/01/one-million-pageviews-for-blog.html
  57. http://diyinvestoruk.blogspot.com/2019/01/aberforth-smaller-final-results.html
  58. https://gentlemansfamilyfinances.wordpress.com/2019/01/18/geoarbitrage-how-to-survive-in-london-with-less-than-a-million-quid-in-the-bank/
  59. https://littlemissfire.com/side-hustles-report-december-2018/
  60. https://littlemissfire.com/paying-off-the-mortgage-jan-2019/
  61. https://littlemissfire.com/how-to-heat-your-home-for-free-with-a-wood-burner/
  62. https://pursuefire.com/the-power-of-compounding-the-rule-of-72/
  63. https://pursuefire.com/monthly-net-worth-report-7-december/
  64. http://www.thefinancezombie.com/2019/01/prime-your-mind.html
  65. https://indeedably.com/left-behind/
  66. https://lifeatno27.com/2019/01/23/winter-cool-calm-and-collected/
  67. http://twothirstygardeners.co.uk/2019/01/how-to-make-rhubarb-and-ginger-shrub-easy-alcohol-free-cocktail-recipe/

Property Renovation Lessons II

Continuing where we left off, we’ll walk in the front door when viewing a potential house purchase. In part two I’ll cover what I’ve learnt to look for in general interior room condition.
Shut the front door

Before shutting it, take a look at it. It seems a bit odd, but much like shoes tell the story of a person, I reckon a front door tells the story of a house. There’s lots of different styles:

front doors

Look at the construction; is the door PVC/ composite/ wood/ metal? Is the style of the door in-keeping with the age of the property? White PVC doors are very common, because cheap, and if a prior owner has opted for a cheap door they may have opted for other cheap options in the house. Has the owner put a modern door on an old house, perhaps hinting at a major modern refurb. In an older property does it retain it’s original wooden door? If so, look at the state of the paint. Such doors can last hundreds of years with maintenance, but need periodic sanding and repainting to maintain integrity. Again you can learn a lot about the owners attitude to preventative maintenance.

Look at the locks and door furniture. As mentioned in Part I, many insurance companies offer preferential rates for BS 5-lever locks. Most PVC doors are safer as they will have a multi-point locking system. Don’t forget to change the locks when you move in. Look at the door furniture; it can hint at chintz inside. Front doors have changed dramatically over the years, they tell the history of a property, and are an easy way to improve kerb appeal (1, 2, 3).

Flooring

You’re in the front door so look down. Victorian and Edwardian builders knew the importance of first impressions. Older properties will hopefully retain the beautiful parquet or tiled flooring. This can be replaced but it’s expensive and I don’t think it ever looks the same (although we have looked at reclaimed parquet in the past).

Worn parquet can be sanded back and re-varnished, as can original floorboards. This can be a DIY job if you fancy a go, budget at least £150 for a sander for a weekend and varnish. There’s lots of guides and Youtube tutorials which can take you through the process (4). Cover everything in dust sheets. We’re still finding dust three years later.

When viewing houses we would find try to find a neglected corner of carpet, or a piece where it had already come up, and peek at the condition of the floorboards. We were lucky with our first property that the floorboards had been hidden behind 100 years of layers of carpet and were pristine. We also discovered a hidden terrazzo floor in a property we lost out on.

Terrazzo is a polished solid flooring, produced by pouring a mixture of resin/concrete and marble/ stone chips (5). It has similarities with polished concrete and resin floors, which are both very fashionable currently (6, 7).

Laminate and carpet

Both of these I could write entire articles about. Laminate can be beautiful when done well. It also offers a cheap DIY way to update and upgrade a tired space, with ‘click-clack’ self-connecting forms available from most retailers. On the cons, it’s loud underheel, and is used by slum landlords to hide substandard flooring surfaces. Engineered hardwood flooring is the step up from laminate where a layer of real wood is added to a ply backing. This can really make a difference to a space but is understandably more expensive (8).

Carpet again comes in all shapes, sizes and styles. Look out for damage to carpet, lifting, or the carpet moth that will munch it’s way through natural fibre (i.e. wool) carpet in darker spaces. Bare patches in corners with discarded casings and potentially larvae will point towards the moth. We stripped the carpet from our whole house and switched to synthetic fibre to try and eradicate our infestation (9).

Wall and ceiling coverings

Lets talk plaster, paint and wallpaper. We’ll start with that perennial favourite, woodchip. Used in the 60s and 70s to hide poor plaster and imperfections, it’s wallpaper will added chips of wood to provide texture. It’s one of the main things to put potential viewers off a house. It’s a bugger to remove, as those woodchips soak up attempts to chisel it off. It’s super messy, takes ages, but is cheap to do DIY (main cost being a £30 wallpaper steamer from Screwfix etc). There’s plenty of guides on the internet into how to tackle removal (10).

The texture and endurance of woodchip means it can hide a myriad of problems behind it. To an extent any textured wallpaper can do the same, and should be treated as such. Anyone can wallpaper a room, and it’s a quick way to refresh a room or hide problems. Don’t be fooled by Victorian anaglypta’s either, which can look stunning but hide issues.

Another covering you may come across is Artex. This is a further 70s product designed to hide poor plastering finishes behind a textured fascade. To make things even better, pre-1980s Artex was made with our old friend white asbestos (11). Undisturbed behind paint this is fine, but sanding or removal risks hazardous dust. The asbestos can be identified and the Artex removed by a specialist company, using steam or preparatory products (12). Some people tackle it themselves, which I would not recommend unless you are willing to risk Mesothelioma. The other alternative is to plaster over the top to produce a new flat surface.

People also deployed Asbestos (the wonder substance) in tile form on ceilings or where drop ceilings have been installed. This is mainly found in commercial buildings, but we clocked some hiding in a renovation project (a right dogs-dinner of a property) and ran. Again it really needs a specialist company to identify. Some people choose to remove it themselves with commercial-grade PPE, but I would not advise due to the health and legal risks (do as I say not as I do) (13). Asbestos has to be disposed of safely, and rules vary depending on your locality on whether your local tip will take it.

The only real mention I’ll make of paint is lead-based paints. If your house was built before the ’70s it probably contains some lead-based paint. This is only really an issue if the paint is damaged, crumbling, and you go around licking it or sticking it in your mouth. Kids do. It tastes slightly sweet (Darwin at work). Lead accumulation isn’t something to mess about with, so keep on top of it and don’t let your kids peel it off and chow down (14).

Plaster

With the exception of paint, all of the coverings above can mask potential plaster issues. This is one of the reasons in recent property searches I’ve tended to prefer properties where I can see what I’m dealing with. Plaster problems fall into three main areas:

  • Dead Plaster

This is more an appearance than a problem itself. Traditional construction techniques were to use thin lathe battens nailed to the structural upright stud wall or brick. Movement of the wall, damp trapped in the plaster or superficial damage can all cause the plaster to lift away from the lathe. Attempts can be made to repair this by pinning the surround plaster and patching, but often it’s easier to hack off and redo with modern plasterboard and a fresh skim. On a ceiling this can suggest damp ‘falling’ from above, so a leak in a bathroom or roof (see below).

  • Cracked Plaster

Smaller cracks caused by structural movement in the property or just general wear and tear can be dealt with filler and a scraper tool. It’s important to make sure this is not the above, by lightly pressing on the plaster. If there’s a ‘give’ and movement then the plaster may well have peeled away from the underlying lathe, requiring more significant attention (15).

  • Damp

Damp. The blank chequebook to a cowboy builder. You’ll smell damp as soon as you walk into a house, that mouldy, fusty odour. It’s nothing to fear as long as you remember one rule. Damp has to come from somewhere.

Actually two rules. Rule two: rising damp is a sales tool. Don’t believe me? RICS agrees (16, 17). While osmosis happens, water won’t climb up a wall in a warm home because it has to. There’s such a thing as gravity. Damp proof courses are a waste of money. There I said it!

I’m not saying it doesn’t happen, but ground and construction conditions have to be really specific. Rising damp requires hygroscopic salts to be present in the minerals used in the walls construction and surrounding soil to create an environment where water molecules can move through osmosis. They’ll often leave crystals on the wall. ‘Rising damp’ as a ‘diagnosis’ got big in the ’60s and ’70s as a way to fix the problem of damp inside houses, right around the time lots of poor quality houses were being built and older houses being renovated by caking them in impermeable concrete (18). Same goes for cavity wall insulation. Older houses built of brick, stone and lime mortar were permeable. They would absorb moisture, they could ‘breathe’. If a wall was facing the predominantly inclement weather it could get damp, but it would dry out when the weather was dry again. The Victorians and Edwardians solved this by having an air-gap cavity wall. People in the C20th didn’t like the fact that walls would get damp, so they covered them in impermeable concrete render or membranes, plus plastic wall paints. They then added double glazing without air vents. This kept the rain and weather out, but also kept moisture produced by general day-to-day living in. If you breathe on a cold pane of glass it steams up. Multiply that throughout your home and you get condensation. This is the main cause of damp in homes. Other causes include:

  • Insulation – (I look forward to the class action lawsuits in 30 years as swathes of government-grant retrofitted old houses succumb to damp damage)
  • Heating on/off – must be constantly ON, but low temp = 15 degrees C – heating and then cooling creates an environment for condensation
  • Ground levels outside higher than inside
  • Broken guttering or missing downpipes
  • Vegetation growing near the wall
  • Trees creating shade and moist air near a wall
  • Lack of ventilation – double glazing, no vents
  • Blocked chimneys – fireplace blocked up, no vents
  • Furniture against walls creating cold, damp areas (18)

The answer is (as always) preventative maintenance and taking a nuanced approach based on the buildings construction. If you live in an older home you cannot expect it to achieve modern standards of insulation. Ensure you use permeable materials to allow movement of moisture in renovation work. Appreciate your higher utility bills as a trade-off for period features and room sizes. As a slight aside here, if buying a new property ensure that there are air vents in the glazing, air bricks in the walls and plenty of opportunities for air movement. Amongst high-end architectural design the move is towards Passivhaus standards, where moisture, dew points and ventilation are carefully controlled as part of holistic approach to construction (19).

How to tackle damp?

Unsightly mould around windows (like above) or on walls (below)? Check for vents in windows and doors. Check the type of paint or wall covering used. Often this is down to people not opening windows or allowing ventilation in an attempt to keep heat in. Crack the window or buy a dehumidifier (20, 21).

Peeling plaster, cracked and lifting paint? The is more likely to be penetrating damp, or a leaking roof or bathroom plumbing if it’s the ceiling. This is often enough to scare off most buyers, but look carefully. Penetrating damp or a leak has to come from somewhere (22). Is the external ground level higher than the internal wall? Are there boundary walls abutting the internal wall? It could be caused by a sill or beam bridging a wall cavity. Go back outside and look externally for cracks in render, damaged, eroded or poorly pointed brickwork, absent flashing or leaking gutters. This is why it’s often good to view a house in heavy rain. If it’s on the ceiling is there a bathroom above? If so run all the taps and check for drips. Is the roof in good condition, and can you view the loft in rain to check for water ingress? We had penetrating damp in a previous house caused by a) a wooden sill which was exposed to rain which soaked internally, and b) an external garden boundary wall abutting the damp wall, with next-door slightly higher than our ground level. Solved by rebuilding the external wall with damp proof tanking. I worked on another house where a ceiling would get wet when the wind blew from the North-East, as it then forced the rain up a pitch through the roof so it could drip down. Had to put a new roof on to solve that.

Electrics

Fuse board

Fuse boards, or more properly domestic consumer units, are a must check. They ensure electrical safety in your home, preventing you getting shocked (/dying) and the house burning down every time something short circuits. They’ve developed over time with progressive regulation changes. Up to 2001 most homes were fitted with fuse boards like the older Wylex one pictured, containing individual rewire-able fuses plus a main circuit breaker/ isolation switch. Since 2001 regs have mandated individual residual current devices (RCDs) protection for circuits, offering extra protection (23, 24). Any new electrical work being done to a property will require an RCD system to meet regs. Budget £300-400 for installation of this alone. My garage is currently (not working) on an old 1940s cast iron splitter unit like the last image piggybacked off the main RCD. I’m exploring ways to retain the unit as it’s bloody cool (25).

Certificates

Sort of an extension of the above, but it’s important to ensure any electrical work that has been completed to the property has been done so by an accredited person. All work should be certificated and ideally marked as tested. Any changes to circuits like adding new sockets, adding new outlets, changing lighting circuits etc technically needs this (26). Ensure you get these certificates when purchasing the property and when you have any work done. It’s often a requirement for property insurance, it can be in the fine print in the mortgages, and you’ll need it to rent the property out (27). Work without certificates opens up a legal minefield, and can knock serious cash off the property value. Copy and paste this to central heating, gas work and plumbing.

Wiring

One to check out as you look around. First, is wiring (and plumbing) fitted with surface trunking, or properly chased into the wall? Trunking fitted to existing wall is quicker, cheaper but looks less attractive (to me). Chasing into the wall is harder, slower and more expensive, but the flush finish looks smarter (28). This will give you an idea of the costs the owner has spent on this sort of work and the quality they’ve been happy with.

If you can see exposed wiring (try next to the fuseboard or under-stairs cupboards) look at the colour of the wiring. Wiring since 2006 has followed European and Australian code; brown is live, blue is neutral, green/yellow is earth. Prior to that we ran red live, black neutral and green earth (29). Since the 1960s most UK wiring has been sheathed in PVC. You can age your wiring on what it’s sheathed in. Prior to PVC was vulcanised rubber (notable by being black), before that was lead (notable because it’s… lead), and before that it was all sorts of odd stuff including cloth and paper-wrapped wiring (30). The cloth, lead and rubber all degrade, so will all be due replacement.

300px-cable_colours_1179-5

We made a not untidy sum ripping out the rats nest of old wiring in a previous property. Once we’d turned everything off at the main breaker we found cloth-wrapped, lead-sheathed (£££) and 1960s wiring had all been run in parallel circuits under the floor. The joys of renovation!

Other things to look out for are old plug sockets like the one below, featuring the earlier circular three pin plug. There were lots of variants of plug prior to the adoption of the ubiquitous three-prong plug and socket in 1947 (31). This means you can reliably date your wiring and definitely decide it’s due a rewire. The UK’s socket design is the envy of the world (32), so embrace it! Brown bakelite junction boxes, on the other hand, are not something to run from. They’re still in production, still used and definitely serviceable (33). I really like bakelite as I think it’s retro, but then I’m a bit weird.

15380076

586px-jbox_ashley_20a_4933-2

Plumbing

Where’s the stop cock? Check if there’s one in the house as well as one by your meter (if you have one) where it enters the property. You and your neighbours will thank you when you’re not screaming “How do I turn off the bloody water?” at 3am.

Pipes

The water pipe for your property is your responsibility from where it tees off the mains (34). Track it’s path throughout the house if you can, check for leaks and quality. Lead has not been used for pipes since the 1960s but most old houses will retain it somewhere (as it’s a pain to replace for various reasons). Most internal pipes will be stainless steel, copper or plastic. Old pipes may be iron. They all degrade over time (at different rates), so need periodic maintenance (35, 36).

Pipes in the UK for central heating are generally copper or plastic (often white). They come in various sizes. Size of pipe is an important consideration when fitting central heating, as you need to calculate the total thermal load on the boiler (the radiators) and the efficiency and flow rates (based on pipe diameter and water temperature) to ensure that your boiler has enough oomph to actually heat all the radiators (36, 37). There’s online calculators that can help you work out your heating requirement to spec this, such as here: https://www.plumbnation.co.uk/heating-calculator/ (38). Frankly, I just get a plumber.
Heating

While we’re on boilers, check if the property has one. There’s essentially two types of heating; wet and dry.

Wet

  1. Does the property have a wet system (i.e. radiators and a water boiler)?
  2. Is it gas, oil, coal, calor gas, solid?
  3. How old is it?
  4. Does it have a hot water cylinder or on demand?
  5. Has it been serviced?

conventional-boiler-explained

This is a whole other set of posts. Essentially most houses are on gas boilers, of which the most common is combi-boilers which do heating and hot water. There’s system boilers, which have a hot water storage cylinder (so are better for households that have multiple bathrooms and need lots of hot water at once), but are generally less efficient. Then there’s conventional boilers which have a water tank and a hot water cylinder (39, 40). Newer boilers across the range are generally much more efficient. Google the brand and model number and check the reviews. Older boilers can be very reliable if well maintained, so check for service record stickers. Budget between £1-4k for a decent replacement, and remember you really get what you pay for with boilers (40, 41). Budget more for a new install on a property without central heating.

Oil-fired boilers and calor gas systems are generally used for the estimated 4 million households that are not on mains gas. Oil is a bit more fuel efficient than gas, but can cost more to buy as the cost fluctuates and you have to store it in tanks (generally bunded green things) (43, 44). You can also run out if you forget to order more, or the roads are shut. Same rules apply re: servicing and replacement.

Dry

In the UK this basically means electric heating systems in rooms. Other countries and some UK commercial and old buildings will use a central furnace and hot air vent system, but they’re inefficient for our construction practices. Electric heating costs more to run than gas, and should really be considered only where gas is unavailable, where heating is infrequently required or where wet system installation is impractical. We’ve gone through various stages of electric heaters too, with electric radiant heaters (i.e. old bar electric bar fires), electric fan heaters, through night storage, oil filled and panel heaters. Fan, radiant and oil column filled heaters are usually portable and can be used to heat up the room you’re in at the time (45).

Panel heaters can be very minimalist and are therefore currently the fashion choice. They’re generally touted as ‘eco’, but given all electric heating systems convert electricity to heat what that essentially means is they don’t use much electricity as they don’t give off much heat. Night storage heaters look more like a radiator and work by heating up a ceramic brick during the night (when electricity can be cheaper if you’re on Economy 7/10 or similar) and releasing it during the day (46, 47, 48). They work much more like a conventional wet system, and get a room toasty warm. Budget £500 per heater.

There’s also ground-source or air-source heat pumps, solar thermal, district heating, underfloor heating, biomass systems and all sorts of others which I can go into in detail if people are interested (i.e. leave a comment to motivate me to do it!). I may do an eco renovation post in the future.

Summary

In part two I’ve covered most of the general building fabric and utilities considerations. This should give you an idea of what to look for on property viewings and in your own home. In part three I’ll cover room specific considerations (kitchen, bathroom etc), construction (chimneys etc) and layout.

The Shrink

References

  1. http://rockmystyle.co.uk/first-impressions/
  2. http://www.oldenglishdoors.co.uk/latest-news/doors-victorian-era/
  3. https://nonagon.style/the-easy-guide-to-exterior-front-door-styles-and-types/
  4. http://moderncountrystyle.blogspot.com/2016/02/how-to-sand-and-renovate-old.html
  5. https://www.doityourself.com/stry/how-to-repair-marble-floor-chips-and-cracks
  6. https://www.homebuilding.co.uk/polished-concrete-getting-it-right/
  7. https://www.allthingsflooring.com/2017/07/polished-concrete-vs-resin-floors/
  8. https://www.ambiencehardwoodflooring.co.uk/wood-flooring-guide/real-wood-or-laminate-flooring/
  9. https://fivestarfurnishingcare.co.uk/carpet-cleaning/do-my-carpets-have-carpet-moth/
  10. http://lusheclectic.com/woodchip-wallpaper-take-it-off-or-leave-it/
  11. https://en.wikipedia.org/wiki/Artex
  12. https://householdquotes.co.uk/removing-artex/
  13. http://www.asbestosguide.org/asbestos-ceiling-tiles/
  14. https://www.webmd.com/women/lead-paint#1
  15. https://www.homebuilding.co.uk/renovation-assessing-the-potential/
  16. https://www.architectsjournal.co.uk/home/-rising-damp-is-a-myth-says-former-rics-chief/5204095.article
  17. https://www.heritage-house.org/damp-and-condensation/the-fraud-of-rising-damp.html
  18. https://www.heritage-house.org/damp-and-condensation/managing-damp-in-old-buildings.html
  19. https://en.wikipedia.org/wiki/Passive_house
  20. https://www.which.co.uk/reviews/damp/article/dealing-with-damp/what-kind-of-damp-is-affecting-my-home
  21. https://www.theguardian.com/lifeandstyle/2008/mar/01/diy.homes8
  22. https://www.heritage-house.org/damp-and-condensation/types-of-damp-what-have-i-got/penetrating-damp.html
  23. https://en.wikipedia.org/wiki/Consumer_unit
  24. http://www.judgeelectrical.co.uk/domestic-electrical/explanations/about-fuse-boards.html
  25. https://www.flameport.com/electric_museum/old_equipment/revo_15_amp_splitter.cs4
  26. https://www.niceic.com/find-a-contractor/electrics-explained/what-are-the-different-types-of-electrical-certifi
  27. https://www.gov.uk/government/news/new-tougher-electrical-safety-standards-to-protect-private-tenants
  28. http://wiki.diyfaq.org.uk/index.php/Electrics,_Socket_Chasing_(Flush_with_wall)
  29. http://wiki.diyfaq.org.uk/index.php/Wiring_colour_codes
  30. https://www.electriciancourses4u.co.uk/useful-resources/history-of-wiring-colours-cable-sheathing-bs7671/
  31. https://www.plugsocketmuseum.nl/OldBritish3.html
  32. https://www.fastcompany.com/3032807/why-england-has-the-best-wall-sockets-on-earth
  33. https://www.cef.co.uk/catalogue/categories/junction-boxes-bakelite-junction-boxes
  34. https://www.ofwat.gov.uk/households/supply-and-standards/supply-pipes/
  35. https://www.homify.co.uk/ideabooks/564032/choosing-the-right-water-pipes-for-your-home
  36. http://wiki.diyfaq.org.uk/index.php/Plumbing
  37. https://www.diydata.com/planning/ch_design/sizing_pipes.php
  38. https://www.plumbnation.co.uk/heating-calculator/
  39. https://www.uswitch.com/boilers/guides/boiler-guide/
  40. https://www.hometree.co.uk/energy-advice/boilers/types-of-boilers.html
  41. https://www.lovemoney.com/news/12664/how-i-saved-1200-on-my-new-boiler
  42. https://www.boilerguide.co.uk/articles/what-size-boiler-needed
  43. https://www.which.co.uk/reviews/boilers/article/oil-boilers
  44. https://www.which.co.uk/reviews/home-heating-systems/article/home-heating-systems/oil-central-heating
  45. https://www.which.co.uk/reviews/electric-heaters/article/how-to-buy-the-best-electric-heater
  46. https://www.energywise.govt.nz/at-home/heating-and-cooling/types-of-heater/electric-heating/
  47. https://www.which.co.uk/reviews/home-heating-systems/article/home-heating-systems/storage-heaters
  48. https://www.cse.org.uk/advice/advice-and-support/night-storage-heaters