Where did the weekend go?

It seems it was Friday only about two seconds ago!  This is where the roofing team got to on Friday afternoon:

156 armadale - roof - 5

You can’t see it very well on the picture (click on it to enlarge), but there are four scalloped diamonds on the roof, spaced in between the windows.  Pete suggested that we do a line of scallops connecting them as well, to echo the one at the ridge line.  I was expecting the diamonds to be three slates wide, as per my original drawing – if you want a laugh…:

20160713_105438_001

they’ve actually gone for four and we may have overcooked it slightly, but I think it only looks a bit overdone at the moment because the rest of the outside isn’t finished.  Once the house is painted a warm white with a dark green front door, a couple of dark green planters with colourful flowers either side, a new fence and new gate, it might well be just right.

Of course, the fact that the front is nearly finished means that I’m going to have to write another big cheque soon, as the second of the three payments is due on completion of slating.  My credit card bill for the insulation and flooring arrived last week (1% cashback on that card!) and when I logged in to pay it, I was slightly alarmed to see that I had no money transfer or balance transfer offers available – there’s been one on that card every month for at least the last three years.  I still have one available on my other card from the same provider, which I will take up next week, but this card has a £12,000 limit and not being able to access that is going to leave quite a big hole in the budget.

Save

Save

Hey big spender

I had to write the first big cheque last week (well, the first one since the one I wrote for buying the place, which was a whopper!), so I thought it was probably time to put my cards on the table and share my budget.

20160603_100304

There are really two parts to the budget: what’s needed to get it to the point where it could be sold or rented and what’s needed to furnish it to turn it into a holiday let.  Here are our figures.

Item Estimate
Roof & stonework £16,000.00
Electrics £4,655.00
Heating & burner install £7,000.00
Joinery £5,000.00
Kitchen units £3,000.00
Downstairs flooring £1,600.00
Carpets £750.00
Plasterboard & insulation £2,000.00
Skirting boards £200.00
Kitchen appliances £2,000.00
Switches, sockets, light fittings £500.00
Interior paint £500.00
Exterior paint £1,000.00
Shower tray & screen £700.00
Shower £400.00
Woodburner & kit £1,500.00
Windows and door £5,000.00
Door stripping £400.00
Miscellaneous tools £2,500.00
Bathroom tiles £250.00
Garden/fencing £2,000.00
Interest, council tax, electricity £3,500.00

Total: £60,455 *gulp* And we’re actually already £2,720 over the roof budget because of the extra work to the stone. On the plus side, the house and surrounding fields were valued at £77,500 on the home report (the rest of the value being assigned to the other croft) and should be worth in the region of £150-160,000 once we’re done, so we’re still just about in profit.

On the furnishings side..

Beds x 4 £750.00
Mattresses x 4 £1,300.00
Sofas x 2 £1,100.00
Kitchen table & chairs £800.00
Coffee table £200.00
TV unit £200.00
TV £300.00
Wardrobes x 3 £750.00
Drawers x 2 £500.00
Bedside tables x 4 £500.00
Pots, pans & crockery etc £600.00
Cushions, pictures etc. £500.00

Total:  £7,500.  I’ve priced up for mostly new, but am hoping I can save some money by buying good-quality second hand – browsing the local Facebook for sale group, I’ve already seen a really nice oak single bed frame that would be perfect for the small bedroom for £45.  A friend of mine recently furnished an entire rental property from the weekly furniture auctions at Dingwall and has a teenage niece who’s got the long summer holidays coming up who is very, very talented at smartening up bargain buys, so I’m hoping she might be employable for a few days!  The one thing I refuse to buy second-hand are mattresses.

We’ve also agreed a £5,000 contingency, bringing the overall grand total potential spend to an absolutely eye-watering £72,955.  We have enough cash, from savings and 0% offers, to get us to the house being more or less finished, but not the garden – so I need to crack on with the decrofting application for the house site to make sure that as soon as there’s a working kitchen and bathroom in place, I can get on with a mortgage application to release money to pay back the 0% deals as they expire and put the final touches to it so it can start earning its keep.

Stripped

Mick decided to take the day off on Friday, got the bit between his teeth and completely stripped the living room.

156 armadale - living room - 4 156 armadale - living room - 5

Sadly no enormous fireplace on this end.  We did have a brief discussion about the merits of swapping the kitchen and living room over, but decided that the extra hassle and expense of replumbing probably wasn’t going to be worth it.  It just means we rotate the kitchen layout 90 degrees and drop the idea of having a big dresser against a wall for all the crockery and cutlery.  There is, however, a lovely old hearthstone in that fireplace 🙂

As the plasterboard came off, it was clear that there was a membrane underneath the concrete floor, which is why it’s dry.  Unfortunately it doesn’t go under the walls, so a little damp has got into the old lime plaster.  We’re going to pick it all off, let it dry out and take a look at the stone, then see if it needs tanking before we put the studwork back up for the insulation and new plasterboard.

Dougie the electrician rang on Saturday with his quote.  Bear in mind that this was the list we ended up with when he asked us what electrical things we wanted in each room:

Front room

Main BT socket
Satellite connection
3 x wall lights
2 x standard double sockets
2 x double sockets with USB chargers
CO2 alarm

Hall
Smoke alarm
1 x single socket
1 x ceiling pendant light

Bathroom
Electric shower to be changed out
Electric towel rail
3 x large (about dinner plate size?) recessed ceiling lights
Extractor fan

Kitchen
6 x recessed ceiling lights (standard spotlight size)
Cooker
Heating control system
Hob hood extractor
Small spots for lighting the food preparation surfaces
3 x standard double sockets
2 x double socket with USB chargers

Landing
2 x recessed ceiling lights
1 x single socket
Smoke alarm
Move meter from hall and bring in power here instead of through the front door
Low-level, fairly dim lights up the stairs, wired to a switch in each of the three bedrooms to light people up and down to the bathroom at night, without waking everyone up by switching on the main landing light

The two larger bedrooms
1 x central pendant light
3 x double sockets with USB chargers
Satellite dish connection
Ethernet connection
Smoke alarm

Smaller bedroom
1 x central pendant light
2 x double sockets with USB chargers
Satellite dish connection
Ethernet connection
Smoke alarm

What do you reckon his quote was?  Mick was thinking in the region of £6,500-£7,000.  I was hoping it would be about £5,000.  He’s quoted us £4,655.  I was so surprised that I completely forgot to ask what I needed to buy and what was covered in that list!  When he was talking about the stair lights, he said the ones he intended to use were in pack of six, so lights must be included, but I know that I’ll need to pay for the shower, the extractors, the towel rail and, obviously, the cooker.  What I’m not sure about are the cover plates for the light switches and sockets, so I’ll have to email him and check.

Since he says he’ll want to start upstairs and can begin in about three weeks’ time, we attacked the upstairs again this morning and made good progress in stripping out some of the last bits of panelling – now David the Joiner has confirmed that all the internal wood that isn’t a sarking board or rafter is non-structural and can be removed, we’re being a bit more adventurous with the pry bars!  Only one worrying moment, which was when I was breaking out some of the panelling below the window in bedroom one, put my bar against an enormous rock in the wall to brace it and the rock moved….!!  It’s completely loose, so it’s been pushed back into place and we’ll get Pete to have a look when he’s next here.  A little bit of wet stone under the window in bedroom two as well, but we’ve had an easterly with rain in it all weekend, and I think it’s just been forced in around the window.

I also got to grips with a power tool for the first time – I used Mick’s drill with a Phillips screwdriver head attached to remove the handrail up the stairs.  It took a couple of goes to get the idea that I had to keep it pushed into the screw even though I was using it to take the screws out, as that seemed a bit counter-intuitive, but 24 screws later I was quite comfortable with it.

Budget Day

Not just for Mr Osborne, but I thought I’d add up how much I’ve spent to get here so far, as the solicitor’s bill arrived this afternoon.

The only two expenses I’ve had (not counting the running costs for my sheep – I’m keeping my crofting budget separate) are the interest on the money I’ve borrowed from my family and the legal fees, so the accounts so far look like this:

Difference between money borrowed and purchase price – £70.51
10th Nov – Interest – £96.68
10th Dec – Interest – £276.88
11th Jan – Interest – £276.88
10th Feb – Interest – £276.88
10th Mar – Interest – £276.88
16th Mar – Solicitor’s bill – £766.00
Total:  £2,040.71

So it’s cost me a little over £2,000 just to get the keys.  In fairness, that’s not bad – I had to sit down when I opened the solicitor’s letter, as I was expecting that to be four figures and possibly starting with a 2!  I shall drop in and pay it tomorrow and leave a large Easter egg for Jane, my solicitor 🙂

I had a call back from Dougie the electrician this afternoon – he was up the road in Melvich, could he come and have a look?  Sure.  The good news is that he’s agreed to quote for it, so I need to think about what I want in each room in terms of lighting and sockets (I don’t need to finalise positions just yet), think about where I want the TV and the phone, as he’s going to hide all the cabling currently tacked to the front of the house for those, and decide whether I want the power to the byre to be on a separate meter to the rest of the house.  He’s also going to move the position of and seriously upgrade the heating controls (it’s a cheap clockwork timer and the noise is really annoying) and move the meter and fusebox etc. – he’d seen that the main power cable into the house is chased into the harling down the outside wall and then goes through a wooden panel above the front door, which isn’t ideal, so since we’re getting the door replaced and we’ll have someone patching the non-harled bits that will be revealed when Pete takes the fascia boards off, it’s going to go through the wall at the height of the connection and all be hidden in a little cupboard on the landing.  Mick has suggested that we ask him to also quote for putting in outside lights, particularly one to illuminate the fanks (sheep handling system), and also for wiring in a back-up generator so that if we do have guests in and there’s a power cut, it’ll cut in and take over.  We actually have a generator here, but it’s not wired in, so it can go down the road.

Another two hours stripping out panelling and bedroom one is very nearly ready for work to start.  The priority over the next few days is to get the surfaces with the Veluxes/proposed Veluxes bare so that if Pete wants to start cutting holes in the roof next week it’s all ready to go.  I uncovered a MAHOOSIVE spider which I thought was dead, but turned out not to be.  Mick really Does Not Do spiders, so I had to dispose of it out of the bedroom window.

She’s making a list, she’s checking it twice…

…and she found she’d left the electrician off it!

Yes, we’ve reached the planning stage.  This is a list (not quite in the right order) of all the stuff we think we have to do to Ethel’s House.

  1. Treat woodworm.
  2. Strip all rooms back to walls.
  3. Repair kitchen ceiling.
  4. Re-wire house.
  5. Enlarge fireplace in living room to take woodburner.
  6. Replace windows.
  7. Replace front door.
  8. Replace roof and all rainwater goods.
  9. Repair chimney.
  10. Enlarge two existing roof lights and add two more.
  11. Insulate all rooms and roof.
  12. Install underfloor heating in kitchen and bathroom.
  13. Install new kitchen.
  14. Install new shower.
  15. Lay solid wood flooring throughout ground floor.
  16. Carpet up the stairs and throughout upstairs landing and bedrooms.
  17. Install woodburner in living room.
  18. Decorate throughout.
  19. Furnish.

Just a bit of work to do, then…  We are really dependent on the electrician and the roofer, as a lot of the rest can’t be done until they’ve finished.  By the time we’ve got it furnished, hopefully the decrofting of the house site will have come through and I’ll be able to get it revalued and apply for a small mortgage to pay off all the money I’ll be borrowing to pay for the list above.  At the moment I have a home report that says it’s worth £77,500.  Compared to other 3-bed near-identical houses in the village currently for sale, that’s very, very low – although all those came to market after the home report was done.  Given there’s a 2-bed bungalow with no land 200 yards up the road that’s been valued at £125,000, I think we should do okay when it comes to getting a good low loan-to-value.

3% levy on second homes

taxes-1015399_1920

Well, I was feeling slightly smug for a few weeks about Scotland not being affected by the 3% surcharge for buying a second home that was announced in the Autumn Statement, but despite the SNP’s avowed loathing of Westminster, they’ve not hesitated in going, ‘Oh, that’s a good idea,’ and doing exactly the same for LBTT (Land and Building Transactions Tax, our version of stamp duty).

Scottish Budget: New 3% levy for buying second homes

I’m really not sure what the recent flurry of legislation affecting landlords is supposed to do, other than reduce the amount of rental stock, thus pushing rents up.  Anyway, if my purchase looks like it’s going to get anywhere close to not completing by the date this comes in (unlikely, but then I thought I’d be six weeks into renovations by now!), I shall be strongly suggesting that the seller pays it.

Holiday letting – council tax or business rates?

Money

No, sorry, I still haven’t bought the house!  I did email my solicitor last Monday to find out if there was a chance of getting the keys before Christmas, but haven’t had a reply yet, so hopefully that’s still a ‘Maybe’ rather than a ‘No’!

However, what I have been doing is looking into some of the things that are going to affect how much I earn from my holiday cottage and one of the main things I was a bit confused about is whether a holiday letting property is subject to council tax or business rates.

Disclaimer – I am not an expert and the below might be wrong!

From what I can figure out, and please remember that I’m looking specifically at the law for Scotland here, it all boils down to how many days the house is available for and how many it’s actually let for.  The Scottish Government website is actually very helpful on the subject if you do a bit of digging.  So, on this page, it says that if my holiday cottage is available to let for 140 days a year or more (which it will be – that’s only 20 weeks), then it will be rated as a self-catering property and liable to business rates.

The next burning question I wanted answered was how much is it going to cost me?  Given that the council tax for our house is £113 a month (which does include water rates), I was pretty sure it was going to be more.  I dug further and discovered that the local assessor will give me a rateable value for the house upon which I then have to pay the poundage rate, which for 2015/16 is 48p in the pound.  At this point I was getting slightly worried – was that related to the value of the house?  Surely they couldn’t be expecting me to fork out tens of thousands a year?

Fortunately not.  I then found this EXTREMELY useful document on how ratable values for self-catering cottages (or castles!) are worked out.  It’s dated 2004, so I’m not sure if the values are still in use, but it gives me some idea and based on the house sleeping 5, done to an H1 standard, and being in a remote (P) location, that would give us a ratable value of £1,025 – and that roughly tallies with the information I found on the SAA website that a 2-bed holiday cottage on the other side of the bay has a rateable value of £800..  So 48p in the pound means £492 a year in business rates, way lower than council tax.  Result!

Then it got even better.  It turns out that the Highland Council has something called the Small Business Bonus Scheme, which, if I understand it correctly, means that businesses with a total ratable value of up to £10,000 get 100% relief from rates – so I will pay nothing at all!

However, business rates don’t include water or refuse collection and I’ve been struggling to find out what I’ll have to pay for those.  I’ve found an old PDF on the Highland Council website which seems to suggest that for a normal domestic 240l wheelie bin collected from household premises in 2010/11, it was £3.43+VAT per collection for a refuse bin and £1.64+VAT per collection for a recycling bin, but I can only see current prices if I apply for a collection. I am completely flummoxed by what happens about the water, I think I’ll have to ring up Scottish Water and ask!  All in all, it does look like I’m going to be better off on business rates.

I knew it!!

so I’m half-expecting it to go wrong somewhere!

I am obviously jinxed when it comes to this particular institution!!  On Friday I received a letter from them.

“Dear Mrs J,

We have been unable to verify your signature.  If you still wish to continue with the encashment, please visit a branch or call us on the below number.”

I’m paraphrasing a bit, they sent me a whole side of A4, but basically I think the problem stems from the fact that I was Mrs H when this account was opened and despite me having sent them a request to change my name with accompanying documentation on no less than five separate occasions by recorded delivery (they eventually changed it on the fifth attempt), they hadn’t kept a copy of my new signature.

Fortunately for them, there is a branch in the nearest town, 26 miles away, after they bought a chain of building societies a few years back, otherwise I’d have been driving the 100 miles to Inverness on Saturday morning, swearing all the way (as I had to do three times when the Inverness branch failed to pass on the documentation they’d certified for the change of address the Croydon branch had told me before I moved I could do in writing and didn’t require any certified docs…see why I was nervous?).

That said, they seem to have had a bit of a turnaround in customer service over the past few years (or maybe it’s because they kept on the original building society staff!), but I produced my passport, driving licence, most recent bank statement and, just for good measure, my decree absolute to prove that I used to be married to a man with the surname I’d signed with to open the account, it was all faxed through to the Premium Investments office and I have a fax receipt that says they received it correctly, so fingers crossed.  I might just give them a quick ring tomorrow to make sure, though…

The countdown has begun

three-853646_1280

I’ve had a letter from my solicitor!  It enclosed the reply from the seller’s solicitors, several maps and the entries from the Crofting Registers for the two crofts.  I’m not exactly certain why or how, but it seems that because the crofts are still held in Ethel’s name, it makes the paperwork an awful lot simpler and cuts out a lot of the waiting around for the Crofting Commission to approve things.  I think, although I may be wrong, that it essentially now treats me as if Ethel had nominated me to take over the tenancies.

Anyway, my solicitor has asked me to confirm that I’m happy with a few changes they’ve made to the clauses (things like the sellers not being able to warrant that the electricity works properly or there are no contaminants, because they’re the executors and haven’t lived there – usually in Scotland you have 2 weeks after the date of completion to report serious defects to the seller, this will essentially be cancelled) and as long as I am, then all I have to do is deposit the purchase price in my solicitor’s bank account and the other side will start the paperwork – my solicitor will hold the money in escrow until they’ve confirmed the transfer of the tenancies has been completed correctly.

So it’s SHOW ME THE MONEY!! time.  I am paying £95,000 for the two tenancies, so I’ve rung up the financial institution that runs the part of the family trust I’m borrowing the money from to see how much is in there.  This makes me sound like a total rich kid – I’m not, my father died when I was relatively young and his investments were put into a trust fund to provide an income for my mother for the rest of her life and capital growth for me and my half-brother to inherit after she dies.  For one reason or another, it’s split between two financial institutions and the bit I’m borrowing hasn’t been paying Mum an income for a number of years now, so my brother and I, as the trustees, decided that the trust would be better off loaning me the money to do this and I’ll pay Mum an income off it at a rate of base rate + 3%.

They told me that there was £91,500 in there and all we needed to do was write to them to confirm that we wanted to liquidate it (1% fee for liquidating it) and close the account.  They’ll also take a pro rata amount out for the quarterly management charge, so I’m expecting to get around £90,000 transferred into my bank account early next week, though this is a bank not renowned for its customer service skills, so I’m half-expecting it to go wrong somewhere!  The remaining £5,000 will either come out of my savings or Mum will add to it from her Premium Bonds so she gets the monthly amount she’s expecting in income.