Ethel’s House – the costs

I’ve just realised that I never did a post about what it actually cost to renovate Ethel’s House. And this one is only happening today because I’m procrastinating about doing one for Coldbackie, because I know I’m not going to like the result!

So, Ethel’s wasn’t a traditional purchase in the sense that we were buying two croft tenancies that happened to have a house on one of them, rather than buying an actual house. We paid £95,000 and at the time of purchase the croft with the house on was valued at £75,000 and the bare croft at £25,000.

Our first purchase on the project was in October 2015, two months after our offer was accepted but four months before it completed, when Mr J got a bit overexcited on Tooled Up and bought himself a pair of plasterboard props. We finally got the keys at the beginning of March 2016 (nothing involving crofts ever happens fast) and the spending started in earnest. We had our first guests at the beginning of March 2018, so the figures below cover pretty much exactly two years.

Bills – £3,311.02
Two years of electricity, oil and council tax when I ran out of exemption time.

Interest – £9,933.31
You can’t get commercial lending on a croft tenancy unless the house site has been decrofted, which it hadn’t. We were exceptionally lucky in that family members were prepared to lend to us, but we agreed it was only fair that interest should be charged.

Legal – £766
Fixed-fee conveyancing from our lovely solicitor.

Tools – £618.94
Mr J was relatively restrained here, for him! (This is a man with many, many sheds…)

Materials – £16,648.76
Now the numbers are getting bigger. This covered things like insulation, flooring, plasterboard, internal doors, carpets, the kitchen units and so on.

Tradesmen – £56,349.27
Wallop! This was the painful one, although it does include a lot of tradesman-supplied materials as well. Top of the list, a brand new roof in slate, £19,367.80. £9,000 for totally rewiring the house, £8,300 for the underfloor heating system (and that didn’t include a new boiler) and £9,300 in total for joinery work.

Subtotal – £87,627.30
I’m subtotalling here because if we’d decided to sell the house, this is where we’d have stopped. When we bought it, the croft Ethel’s stands on was valued at £75,000, that included the stone byre outbuildings and about 6 acres of fields. We got a £5,000 discount from asking price, so take £2,500 off each croft, bringing it down to £72,500. When we got a mortgage on it, in May 2018 (after doing all the required paperwork to decroft the house and a very small piece of garden ground behind it), the house and little bit of garden were valued at £165,000. So add, say, another £10,000 on for the rest of the six acres and the four stone outbuildings to give a finished value of £175,000. Subtract the original £72,500 and the £87,627.30 spent and you end up with a profit of £14,872.70. Not a lot for two years of hard work if you divide it up by the hours we put in, but at least it was a positive figure!

Furnishings – £14,627.95
But of course we didn’t sell it and I underestimated how much it costs to kit out a house from scratch! Furniture and white goods were, of course, the major part of this, coming in at £11,105.78, but then you’ve got cushions, duvets, pillows, pictures, curtains, table lamps, log baskets, all the kitchen equipment, cleaning stuff and three complete sets of bed linen and towels (one in use, one in the wash, one ready for changeover). Take all that off and the profit comes down to a tiny £244.75.

But we now have a wonderful warm house that guests love to stay in and in non-Covid times it’s producing a decent income, which was the ultimate aim. Looking at local prices, I would say it would now value £10,000-£15,000 more than it did in 2018, so as long as we keep it well-maintained it’s acting as a savings account for my retirement.

Getting through Covid-19

It really has been a funny old year to be in the holiday letting business. What we thought would be a brief shutdown to get things under control quickly turned into a major issue. I’ve been thanking my lucky stars that (a) we’re in Scotland, where things seem to have been handled a bit more efficiently than England and (b) we’re in the Highlands where infection rates have remained very low.

I was lucky in that Ethel’s was on business rates and therefore qualified for the £10,000 Covid grant (although initially the Scottish government wasn’t going to give it to self-catering accommodation, unlike the English holiday lets). Coldbackie was supposed to open in May, but couldn’t go onto business rates until it actually did open – all work ground to a halt there and it eventually opened in the last few days of August.

I was initially cheered by the extra cover on my insurance policy, which had a clause that covered me for business interruption caused by “an occurrence of any human infectious or human contagious disease, an outbreak of which must be notified to the local authority” – which you might have thought covered Covid. The insurers disagreed and said that since my premises weren’t themselves affected, just people’s ability to travel to them, no claim was allowed. This has now gone through the courts, fronted by the FCA, and is still rumbling on.

Officially Scotland was allowed to open up its self-catering facilities again at the beginning of July, but our village was extremely nervous about tourists coming back to the area (on the North Coast 500 route, we were flooded with campervans as soon as restrictions lifted), so out of respect for our neighbours we kept Ethel’s closed until the beginning of August, losing another month of what would have been peak income.

Through August, September and October we were packed, back-to-back weeks at Ethel’s and mostly full at Coldbackie even though it was a new launch. We decided not to go for our booking agent’s Safer Stays badge, as one of the criteria for getting it was moving check-out time to 9am and check-in to 5pm – and reading through a couple of Mumsnet threads full of outrage about the idea from people trying to book holidays, we decided we’d stick to the rest of the principles but keep our original times. The extra clean-down with an antiviral spray added about an hour to the turnaround time, but we bought second sets of things like handwash, washing up liquid and so on and just swapped them out each week to quarantine them rather than having to wipe them all down.

And now we’re in November, England is back in lockdown, most of Scotland is in tier 3 and I’m sitting here in tier 1 having gone from a completely fully booked November to a grand total of 12 nights. My two-week Christmas and New Year booking has cancelled (and bless them for cancelling it early and not hanging on, because I might pick up another one from someone within the Highlands) and essentially I’m expecting no money from now until March (which is already full at Ethel’s bar the last few days that start the week going into April!).

That said, if no income over winter, when I’m losing about £290 a week, means I can open all summer in 2021, when I make about £900 a week, I’ll take this current shutdown. With the news about the Pfizer vaccine breaking a few days ago, I’m hopeful that 2021 will be a brighter year for business.

Some potential renovation projects

One of my worst faults is that I have a constantly roving eye for a house in need of a bit of TLC.  Here are a few that have caught my attention recently, though they’re all either sold or probably will be before long!

The Old Schoolhouse, Halkirk

Lovely traditional house in Halkirk, packed with period features – just look at this staircase!

Formerly inhabited by a heavy smoker, this would need stripping right back.

It’s got damp issues and I’d want to get a loo/shower room in downstairs somewhere (possibly by taking a bit off the dining room), but this house has amazing bones and has an enormous back garden that could potentially provide a plot to build another house on.  Was on at offers over £115,000, went to fixed price £103,000 and is currently under offer.

St Andrews Church, Thurso

Pete tells me I am not allowed to buy this until I am making more money than God.

The roof is shot and has been for years and a lot of the glass is broken.  But what’s left is beautiful.

And yet again, a wonderful staircase.

I think it would make a fantastic space to show off the area’s artists and craftspeople – turn the downstairs into cubicled work areas for creatives, turn the upstairs into a gallery/showroom to sell their wares. Downsides are the lack of parking and the fact that just sorting out the roof is going to run into six figures.  Also B-listed.  Currently under offer for the third or fourth time at £50,000.

Adastra, Wick

This is a former drill hall, used by the Territorial Army from 1890 to 2018.  Gorgeous proportions.

Lovely old stone floor and upstairs, the drill hall and those amazing windows.

It has three entrances at the front and looks from the floorplan like it would split vertically into three houses fairly easily.  The problem is that they’d be pretty big family-sized homes and there’s no garden.  Currently on at a fixed price of £120,000, down from its initial asking price of offers over £150,000.

I have a load more I’m keeping my eye on, but that’s probably enough for this evening, I’ll save the rest for another day.