House Hunting during a Property Boom

As mentioned recently, I have been house-hunting.

The last time I did this was ten years ago, when I bought my BTL flat.

Different times, different circumstances, different reasons.

Fast forward to today and let’s just say that had I been able to, I would have picked a less frantic and chaotic time to look for a new home!

Boom

I’m sure most of you will be aware that there’s currently a property boom, with properties being snapped up like hot cakes, despite the continually rising (and often ridiculous) prices. It’s definitely a seller’s market.

As soon as I knew I was buying, I registered with around a dozen local estate agents. Only 2 bothered to get back to me – they’re inundated with buyers.

Walking into the estate agents’ offices yielded better results. Some properties were on the market for only a few days (some for just one day) before they were sold and I can verify this from my own experience of fruitless efforts.

Why the boom?

Various factors, including people having surplus cash saved up during lockdown and of course the stamp duty holiday. That said, house prices are predicted to continue rising for a while longer even after the holiday ends and then at some point, the housing bubble might burst – the prices can’t continue to go up forever, can they?

Viewings

Anyway, it was weeks of frustrating searching before I was even able to get to view my first property, despite finding several which I liked.

With COVID restrictions still in place, properties were already sold or under offer even before I had the chance to enquire about them, never mind view, or the sellers weren’t accepting any more viewings because they already had (on two properties I was interested in) over 30 buyers interested. Ridiculous.

I realised that I had to dedicate time in the day to enquire about properties – leaving it until when I’d finished work was too late.

Went to view one house which was nice at an affordable price but I realised that it was too far away from friends and family (and work, as I’ll still be expected to go in the office, even if on a flexible basis) so at least I was getting a sense of how far I would be willing to move to.

Agents told me that they had even been selling some properties with no viewings (as in people just buying from looking at photos) – it’s not something I would contemplate doing.

Alas, with demand far exceeding supply, I’m competing against families looking for a decent 3-bed semi-detached, with a nice garden in a nice location. Lockdown has changed the priorities and perspectives for many, although such properties have always been in demand, the current boom is exacerbating things somewhat.

I’ve been thankful that I’m working from home so I’ve been able to block out my calendar for 40 mins and nip out for viewings in the afternoon; this task would have been virtually impossible had I been in the office, with only evenings or weekends available.

Rush Hour

I know I shouldn’t rush my decision in buying a house, but I feel like I’m caught up in very fast moving times and if I don’t move at the same speed, I will miss an opportunity and in this current climate, there aren’t that many to begin with. And of course, property prices continue to march ever upwards.

via GIPHY

Don’t get me wrong, I’m in a much better place than I was a couple of months back when my head was in a complete spin and I couldn’t think straight.

I have a plan, I’m progressing with it, I feel like I’m getting back in control.

When I see a house I really like, I will make an offer – I don’t feel like I have the luxury to dilly-dally or drag things out.

Anyway, I have a viewing lined up this weekend and another next week, so fingers crossed I will find somewhere soon, somewhere which ticks most of my boxes.

I’m resigned to the fact that I probably won’t find my perfect ‘dream home’, but whatever I find, I hope to just make it ‘my home’.

Wish me luck!

Plans are Things that Change

Thus goes the quote by Fujio Cho, the honorary chairman of Toyota.

I’ve had a lot on my mind lately, not just the bubble of stress I’m beginning to feel, with my boss leaving next month but about something else.

It’s resulted in me sticking my head in the sand, procrastinating. Wanting to hide.

Me, lately.

It all started with various conversations with my Mum, the gist of which you will get in the below summary of said conversations:

Mum: “I’ve thought about it and I definitely want to sell the house asap.”

Me: “What house?”

Mum: “The house you’re living in. I told you about it earlier in the year.”

Me: “No, you didn’t tell me.”

Mum: “Oh, it wasn’t you then, it must have been your sister. Did she not tell you?”

Me: “No. She’s been really busy sorting out her own house.”

Mum: “Well I want it sold. You need to move out and get your own place.”

Me: “It’s not a great time now. I can’t sell my flat as the cladding issue hasn’t been sorted. How about next year?”

Mum: “I don’t want to wait that long, just get it done. Since you can’t sell your flat, do you need a loan then?”

As a reminder, I currently live on my own in our old family home. I pay nominal rent to my folks but have been responsible for the upkeep and repairs of the house. Over the years, the house has been a UK holiday home for close members of the family to stay in when they are over on holiday.

I always knew I would need to move out sooner or later – later rather than sooner though, according to my plan.

My FIRE plan has always accounted for the fact that I would either be renting or with a mortgage once I’d FIRE’d. Originally, I planned to continue to receive rental income from my BTL property upon retirement, but I came to realise that I would find it too much hassle, so I decided that, at some point, I would sell it and use the equity to buy somewhere to live.

Cladding Schmadding

As I wrote here, my flat is caught up in the cladding safety issue. It doesn’t actually have any dangerous cladding but building inspections have revealed that it doesn’t meet the new fire safety regulations. Until this is rectified, I (and the other leaseholders) must pay for a Waking Watch (fire wardens), which has nearly tripled the service charges we have to pay, and we will also have to pay for the building to be made safe, whereby a safety certificate shall be awarded.  I cannot sell my flat without such certificate.

Since I can’t sell it, I will have to borrow more against the BTL but am uneasy about this because I still don’t know what the final property bill will be yet. The rental income I’ve been getting over the years has been put aside for ‘property purposes’ but this is now earmarked to go towards the final as-yet-unknown cladding bill. I dread to think what that might be.

Because of these factors, it’s looking inevitable that I’m going to have to use part of my Future Fund to fund my house purchase.

The thought of it makes me feel sick and depressed.

Feeling Low

This has really been getting me down. My Future Fund is not meant to be used now.

Yes, I acknowledge this is a first world problem, not a ‘real one’. I have the funds to use, so what’s the problem? The problem is that it’s messed up my plans, and I feel like I’m starting to spiral out of control.

I need to get my head around everything, adjust my plans (and my thinking) so that I feel like I know what I’m doing again.

Why Now?

I’ve always known that at some point in the future, my folks would want to sell the house, but why now? With my Dad’s heart issues one year which resulted in a cancelled trip and with no travel being allowed in 2020, it’s now been over 4 years since they were last in the UK. They used to have regular holidays, lasting several months, enjoying the British summer (such that it is), and avoid the worst of the scorching and humid summer months in the far east.

Clearly, absence has not made the heart grow fonder, and for some reason, their friends were always telling them to sell up and transfer the funds to Hong Kong (though what business it is of theirs, I don’t know…).

I think the pandemic has accelerated the timeline of the house sale. I reckon had my folks been able to make their trip over to the UK last year, I don’t think they’d be wanting to sell so soon.

However, it’s probably now unlikely that my Dad would rush to make the trip over at his age now – the effects of lockdown have made him years older – perhaps one more trip, perhaps no more, I don’t know, so I guess it makes sense for them to get rid of their last asset in this country.

Would I not want to buy the family home? Much as I love the house, it’s too big and way out of my budget and if my folks were to sell it to me cheaply, it would cause sibling friction and that’s best to be avoided at all costs.

Bank of Mum and Dad

I tried explaining several times about the cladding issue with my flat and each time, my Mum’s answer was that the issue would be resolved with her giving me a loan.

The first (and last) time I borrowed from my parents, I was 20 years old and the loan was used to buy my first car.  This loan was paid back (as are all loans to family members).

I had used my own money to purchase my first property (the one I had with my ex), so it doesn’t quite sit well with me that in my 50s, I’m left with no alternative but to borrow from my folks to buy a house. I’m sure this might be normal for some people but it just doesn’t feel that way to me.

Perhaps it’s a bit of foolish pride – I would have much preferred to have done this all on my own.

Plan of Action

As already mentioned, I need to take action to bring some semblance of control back.

I don’t have a lot of cash in my Future Fund, just some in premium bonds.  A week ago, (randomly timed before the markets started to wobble all over the place), I cashed in on some profits in some of my ISA investments, in preparation for when I might have to use the cash. As a mainly buy and hold investor, it was hard to sell but needs must.

From this month, the chunk of money I normally invest in my ISA will instead be lumped into premium bonds to add to my cash pile. I can’t bring myself to stop investing entirely so I will leave the small standing orders that pay into my ISA (and my SIPP). I’ll also continue to invest any extra bits of cash from my side hustles and also carry on investing any dividends received.

So, when it comes to dipping into my Future Fund, the premium bonds will be used first, then uninvested cash sitting in the ISA, then finally as a last resort, sell more equities if required. Or should I sell the bonds? Not figured that out or looked into that yet.

Remortgage

I’ve contacted my BTL mortgage provider and have received confirmation of the amount extra I can borrow, which I’m (mostly) comfortable with. However, as this isn’t the full amount of equity I could have realised from my flat sale, it’s unlikely to be a big enough deposit I would want to put down on a house.  So it looks like a family loan will be required.

However, once I am able to sell my flat, I will be able to pay the loan back in full.

House Hunting

I’ve registered with various estate agents and looked online myself – houses are being snapped up really quickly and I’m finding that some appear on websites already Sold STC or Under Offer.

Due to social distancing, for houses I’ve wanted to view, I’ve been placed on a waiting list as I guess viewings have all been restricted.

I’m sure something will come up. I might not be able to stay in the area as house prices are mostly out of my budget but who knows, I may be lucky and the right property will come up and I’ll be quick enough to pounce.

Control

Despite how it all seemed at first, I do have an element of control as I’m the one who will need to put the house on sale and I won’t be moving out until I’ve found a place to buy. The ‘chain’ also only impacts the property sale, not on the property purchase, since the funds to purchase the latter are not reliant on the sale of the former.

I reckon I will need to reconsider my costs (and my lifestyle) as I may have to tighten things up, while I adjust to change. My anticipated mortgage will likely be marginally more than what I pay my folks for rent right now so no material change there – it’s the initial costs of a new home which are going to be the killer, plus any other house costs which might have to be sorted once I’ve moved in.

And once I’ve settled in, a kind of normality shall resume so that I can continue on my FIRE journey in earnest.

Phew!

I feel a bit better for writing that.  The uncertainty of it all still scares me but things will become clearer in time. I hope it will soon feel like it was my idea to move in the first place and at that point, I think I will feel a lot more comfortable.

Some heart-felt thanks go to @indeedably who reached out, provided me with a friendly soundboard and ear, and made me see some of the positives, where I could only see the negatives.

Onwards and upwards.

Thought Experiment #2

This isn’t SavingNinja’s 2nd thought experiment but it is the 2nd one I’ve taken part in and neatly follows on from the first one I did.

Here’s the scenario:

You wake up one rainy morning and after checking on your accounts, you find out that you have been wiped out by a cyber-criminal! You’ve lost all of the money and assets that you’ve ever owned and can’t get them back. What will you do?

Not actual depiction of a cyber-criminal

The assumption here is that a hacker will overnight siphon off everything in my accounts, by which I mean all the cash sitting in my current accounts, savings accounts, cash ISA and premium bonds account. Also, the investments in my S&S ISA and my SIPPs will have mysteriously disappeared (unlikely for the SIPPs, seeing as they can’t be accessed til I’m 55 but humour me!). Shockingly, my DB pension is also gone and there’s a mini-meltdown in the US as it was part of a global pension pot and not only my pension was targeted!

Even the cash I have in my betting and exchange accounts has been hoovered up! Contacting said providers prove futile, the money has disappeared into the ether. I don’t have any cash around the house (around £20 change in moneyboxes and at the time of writing, £12.58 in my purse).

I will assume however that the hacker hasn’t managed to persuade HR to fire me overnight, so I’m still employed, that I will still have my rental property and I will still have a roof over my head.

So not quite starting from absolutely zero, but still a bloody nightmare scenario.

What to Do?

The first thing I would do would be (in no particular order) to panic, swear a lot, beat myself up about how I should have changed my online passwords more often and then drown my sorrows in vast quantities of alcohol.

I would probably spend hours trying to find out if anything could be done about recovering my DB pension since there will be over half a million other people in the same situation.

Once I’ve calmed down a little, I would tell my family (though not my parents or my grandmother – don’t want them worrying needlessly) and probably a couple of my close friends. My message however will be that despite what’s happened, I’m alright, because I know they will want to help me. I would probably get a short term cash loan from the family, to cover expenses until I get paid.

What Next?

It won’t just be the fact that I’ve lost all that I’ve saved up, but I’ve lost the ticket to achieving financial independence, retiring early and retiring comfortably.

With my FIRE plan down the pan (heh!), I would need to draw up my new plan, which would be probably be to ensure that I end up retiring comfortably at normal retirement age.

What would I do differently ?

I would set up an emergency fund first and foremost. I would then see about building up my pension/SIPP investments again, more so than in my ISAs. Seeing as I won’t need the money until later in life,  I may as well take advantage of tax relief.

I have a feeling that I would be a lot more frugal, verging on the extreme side as I try to claw my way back to a comfortable financial situation. In desperation, I might even cross the line and become stingy and penny-pinching, although I hope not!

One thing I would probably do would be to go back to my strict budgeting, which I haven’t done since I was eyeballs deep in credit card debt. It’s no fun logging every penny spent.

Perhaps I would consider looking for a better paid job but more likely, I would certainly spend my spare time just hustling and looking for more money. And yes, I’ll be scouting out for coupons!

More time spent matched betting (even consider multi-accounting which I don’t do now) and I would dial down on my social life but not completely as my friends are important to me.

I’ll still put money aside to travel to see my family once a year – that’s one thing I wouldn’t ever change.

And finally, I will just get my head down and be a worker bee to earn a steady salary.

Miserable yet…?

This all seems to point to me leading an extremely focused but not very happy life, being obsessed with trying to build up what I lost.

Yet if I think about it, there are a lot of people who are in this situation, where they do not have savings for their future and yet they are happily going about their lives.

I think due to the fact that I had saved up and then lost it all, it’s possible probable that I would become quite obsessed about it all, which doesn’t sound good at all.

Plus I would need to get my head around working until my mid-60s, something which I was quite happy to do before I discovered and planned for FIRE. I really shouldn’t have taken that FIRE Red Pill, which made me see the light!

I would hope that I would still be able to enjoy my life and my work but knowing me, I think it would take a while before I could get over something like this.

Gosh, that’s gone a bit dreary and bleak, hasn’t it?

Anyway, below is SavingNinja’s take on the thought experiment and as and when I see other bloggers taking part, I’ll add below:

What would you do if this happened to you?

Chinese Roller Coaster and Holiday Bits

Headline from a Hong Kong newspaper last week

While many eyes have been on the shenanigans in Greece over the last couple of weeks, over in China, all hell was breaking loose on the stock market, resulting in the Chinese government taking some severe (and rather unorthodox/questionable) action to prevent an almighty crash, one that could have mirrored the 1929 Wall Street Crash in terms of financial devastation. 
Fifty per cent of stocks were suspended from trading (over 1400 companies), while company bosses and major investors were banned from selling up for the next six months.

The share rout wiped nearly a third off the value of the market since mid June, but had been preceded by a year-long rally generating dizzying gains.

As the newspaper headline in the above picture states, on 8th July 2015, HK$1.4 trillion was wiped from the Shanghai Composite Index.

That’s equivalent to over £116,000,000,000.00.  In one day…yikes!

No wonder people were panicking!  With the Hong Kong Hang Seng Index also plummeting at the same time, I witnessed first hand family and friends wondering if they too should bail or hold, as they saw their portfolios fall off the edge of a cliff. Seems like many people buy shares on margin (borrow to invest), including one woman who (according to the newspaper) had re-mortgaged her apartment three times and was now desperate to sell her property as she had lost nearly all of her money in the stock market crash….

The market has since recovered slightly and I’ve learned that one of my sisters was brave enough to buy when everyone was selling and she has made a tidy sum with the subsequent upturn, enough to pay for her next couple of holidays overseas! She was obviously following Warren Buffet’s wise words of “Be fearful when others are greedy and greedy when others are fearful“, although she may have had some prompting from her husband who’s an ex-trader!

Anyway, Ermine talks about it in more detail here and mentions how the ups and downs of the Chinese stock market could affect people who are invested in Emerging Markets, where there could be some exposure to China.

I don’t believe people outside of China can invest directly on the Shanghai Composite Index, but who would be brave enough?

A bit about my Holiday

I had a great couple of weeks in Hong Kong, spending quality time with my family and catching up with friends. The weather was very hot and humid, a welcome change from good ole British weather, although I gather there was a bit of a heatwave while I was away. Managed to squeeze in a couple of boat (junk) trips, a day out on the beach, two cinema trips, a free-style drawing event and lots of meals out – it was fab.

My family are all ok,  despite the cost of living being extremely high over there and continuing to rise. All working members of the family have very high disposable incomes so they’re actually all doing more than ok. 
In fact, with what was happening with the Chinese/Hong Kong stock markets, two of my sisters decided that they were better off with their spare money in property, so just like that, after a quick bit of researching (Zoopla and Google Maps), they put deposits down on properties in the UK. Nice to have cash spare and sitting in the bank like that, haha! They live very different lives from me!

The local English language newspaper (South China Morning Post) was full of adverts for Zone 1 London properties for sale – these apparently get snapped up rather quickly as they are often cheaper than prime properties in Hong Kong, so make great investments (although my sisters didn’t go for properties in London this time, they’ve opted for Manchester).

Holiday Spending

I didn’t spend too much on this trip and purchased only a pair of sandals and trainers, some small items for the kitchen, as well as a couple of gifts for colleagues. I got some cast-off clothes from my sisters (it’s great us all being around the same size!) and my soon-to-be-early-retired aunt gave me some surplus gym/casual wear.  Who needs to shop!?

I did spot one item while in a supermarket at such a ridiculous price that I just had to share here:

This is a gift box of Japanese grapes, sold in a high end supermarket (probably HK’s equivalent of Waitrose). 

Yes, the price is HK$758 – that’s £63 for a punnet of grapes, about £3 per grape!  Apparently the grapes were “rare, organic and specially harvested” – blah blah waffle!  There was only one punnet left on the shelf, so I’m guessing they’re quite popular despite the ridiculous price…oh how the daft rich people live, lol!

Anyway, just a couple of snaps below from my trip, plus a kind of ‘where’s Wally?’ kind of photo at the bottom (snapped by the professional photographer at the free-style drawing event I mentioned earlier) – yes, I am in the crowd, mingling and trying to blend in with all the young folk, haha! 

Those who have met me previously may spot me quite easily though!