At a crossroads

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Still in Crofting Commission limbo here, but I thought this house turnaround a few miles away from me was worth a post.

strathy-red house

This house, at the crossroads in Strathy, came up for sale back in May 2013 – don’t know what the asking price was then, Property Bee isn’t telling me (from memory I think it might have been offers over £70,000), but it was dropped to £65,000 in February 2014 and then fixed price £55,000 in December 2014.  It sold the following month, according to the Registers of Scotland, for £45,000 in January 2015.  The original listing can still be seen on Rightmove.

Anyway, they spruced it up and I’m assuming fixed the many, many issues in the home report, and have been running it on AirBNB as a holiday let for the last year, but it’s now for sale again, this time offers in the region of £110,000. I shall watch this one with interest.

The Great Hot Tub Debate

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One of the long-running arguments in this house about just how high-spec we’re going to make this holiday cottage has been centred round a hot tub. My husband thinks it’s an absolute essential. I’ve been pointing out that since we’re on the north coast of Scotland it’s likely going to be (a) raining, (b) blowing a gale, (c) freezing, (d) midge city.

seaside-694378_1920

However, today he came home with what might just be a killer blow to my anti-hot-tub sentiments.  A friend of his is looking at buying a holiday cottage further south, in Aviemore, and has found that houses with a hot tub can command a premium of £200-250 a week over ones without.

That’s not a figure to be sniffed at, so I did some research and it does seem that hot tubs are pretty in demand for holiday homes – I was wondering if the extra income would be negated by lower occupancy, but that doesn’t seem to be the case, or at least not significantly so.  I also considered the fact that Aviemore is the hub of winter sports in the Highlands and the tourists it attracts are sporty, outdoor types who would appreciate a soak at the end of a hard day out in the hills, but then thinking about my target market for this house, which is a relatively high-income couple with children looking for somewhere they can surf, walk, mountain bike, play on the beach etc. – it actually describes one of my brothers-in-law’s family to a T and they absolutely adore their hot tub.

I’m guessing ‘watch the Northern Lights from the comfort of our hot tub’ might be a pretty good selling point.  Next time I’m down in Inverness I’ll take a detour to Nairn and go and talk to our local dealers/installers.

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

by In Ethel's House, Finances, Projects, Renovations Tagged , , , , , , , , 2 Comments

…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.

Holiday letting – council tax or business rates?

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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.

Tax changes for residential landlords

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My lovely accountants, the Long Partnership, have started their own YouTube channel and this week’s soundbite is about the tax changes for residential landlords.  Much food for thought and well worth two and a half minutes of your time.  I’m wondering if I should stick to holiday cottages rather than going into buy-to-let, as they’re not affected by the changes and there’s a wonderful local cleaning company who can do the changeovers for me.

Holiday let – half home, half hotel

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I’m writing this lying on the sofa in a hotel suite in Vienna (my husband’s been working out here, so we were able to access a corporate rate that made it less expensive than a tiny hotel room in London) which is my home from home for a few days and it’s got me thinking about what I can learn in terms of furnishing my holiday let from how this four-star hotel has decked out one of its best rooms.

Firstly, the shower.  I LOVE it.  It’s a combination shower with a fixed waterfall head and a separate hosed shower, a bit like this:

shower riser

(that one’s on sale at Victoria Plum at the moment).  Since I don’t have much space to play with in the bathroom and I’m not a fan of over-bath showers, I think this is a fab idea – we only have a rainfall head in our shower at home and it makes it a pain in the behind to (a) clean and (b) wash the dog!

In fact, the bathroom in general has been done beautifully – not quite enough space for his & hers sinks, sadly, but they’ve provided top-of-the-range toiletries and flannels for us, enormous white fluffy towels, enormous white fluffy bathrobes and there’s a separate loo.

They also score points for having HD Samsung TVs in both the living room and the bedroom and the pod-system coffee machine is a nice touch too (not that I drink it, but my husband is enjoying a morning caffeine jolt each day!).  The sofas are comfortable, there’s air conditioning and there’s a small balcony with a table and two chairs on it with stunning views over Vienna.  All things I can take and use (well, I can’t magic up views of Vienna, but I can manage stunning sea views instead).

What don’t I like?  Some of the furniture positioning is a little strange.  For example, there’s an enormous desk in the bedroom, but the wardrobe is in the living room – I’d have swapped those around.  Also, no mirror in the bedroom, the bed is two singles pushed together rather than a double/king (with two single duvets on it) and I’d have liked a sound bar/music system I could dock my MP3 player into.

Talking of beds, I stayed in a Travelodge in London on my way out here and got one of the new beds – they’re not kidding, they really are incredibly comfortable, though the edges of the mattress are quite hard and I caught my leg on it more than once walking past the bed to the bathroom!  I’m prepared to overlook that, given that I didn’t wake up with my normal stiff back (I tend to fall asleep on my side and over-curve my lower back – or, in less posh terms, I sleep with my bottom sticking out!).  Apparently you can buy them – I’ve just had a look and mattress-only is £399 for a standard double, so they’re definitely going on my list.