A new home

I had a flat viewing yesterday, which was only a few minutes away from our current home. It looked decent but the agent tried to pressure us into taking the property because somebody else had already made an offer and paid a holding deposit but not yet seen the flat… and the other chap wanted a starting date which was a bit far in the future.

It all sounded a bit off. Why was the agency still showing the flat to people if a holding deposit had been paid? This sort of thing doesn’t sit well with me. The whole point of the holding deposit is that it holds the property for a particular individual. That’s not a difficult concept. Real estate agents really do deserve their low reputation.

We decided that we weren’t interested in the above flat and didn’t want to get involved with that agency.

Next day we had a viewing with a lovely old Asian lady, who gave us a tour of her rental property. She came across really sweet and lovely etc. We liked her and the flat.

That property was listed at £1,250 pcm and was immediately available. According to Zoopla it had also been on the market for circa two months already and this was a “listing manipulator” who kept increasing and decreasing the price many times.

We went home and after a chat we decided the property ticks the majority of our boxes and we made an offer of £1,150 pcm (£100 below asking price) with a move in date one month away from today (about 3 days before we need to move out of our current home).

We shared our house hunting adventure with a few friends who found it incredible that we make offers for rentals. I suppose some people are more comfortable paying the listed price or it’s never occurred to them that prices are always negotiable.

We got a response to our initial offer. The agent wanted to meet half way i.e. £1,200 pcm and move in about 2 weeks away from today.

I had a very brief chat with my girlfriend and we responded that we “unfortunately will not accept the counter offer as there are many flats in the area, which could meet our criteria and we have several viewings booked for next week already”. I also said that our initial offer is still on the table should the landlady reconsider.

Within half an hour the agent got back to us to confirm their surrender to our terms. We’ve now paid the holding deposit and will go through the referencing process etc. It almost feels like it was too easy to find our new home…

We did the same sort of negotiations last year, which worked out exactly the same way. So, I’d encourage you to try this method as well.

Agents always try to pressure you into making a decision quickly and want more money out of you. Stick to your guns and see what you can get away with!

In the future it would be nice to have more transparency around prices and information for individual properties. Maybe a standardised two-page factsheet like they do with investment funds could be handed out at a viewing. It would tell me the name of the owner, summary of features, risks (i.e. vermin problems, heating issues), timescales it took to fix said issues, history of repairs/improvements, history of rent amounts paid, council tax costs etc. Maybe this information could also live on a Blockchain so that landlords couldn’t manipulate the data. One can dream…

Anyway, a little about the new home… It’s a larger one-bedroom flat (52 sqm), has a private garden (90 sqm – I calculated this from the floor plan they provided… it’s quite large when we saw it, so might be accurate) and has clear separation between the bedroom and living room (so it’s possible for two people to work from home). The rent remains the same as our current suboptimal flat.

The above should give a bit of a flavour of what’s it like in the current rental market in London. I think we got a decent deal and we are very pleased with ourselves.

Hopefully all goes well and we get to sign on the dotted line some time next week.

Enjoy the rest of the weekend,

A couple renting in London

A renters perspective on landlords and letting agents

I’m spending a lot of time online browsing Zoopla and RightMove to find a new home in a nicer part of London. I have a bunch of suggestions for the chaps developing listing websites/apps and also some observations about landlords/letting agents.

  1. There is no floor plan. I would love to have the option to exclude properties, which do not have a floorplan from my search results. It’s important to know what the layout of my new home will be…
  2. Landlords hate pets. C’mon have a heart and let people live with Schnuffles, Fluffy and Brohound. You’re charging a security deposit and have a million clauses in your rental agreement about who is liable for damage to the flat.
  3. It’s not possible to screen flats by their size i.e. square meters. I’m not interested in living in a shoebox – I’d like to have the option to only look at flats which are of a certain size.
  4. On Zoopla, you can see the previous prices for the same advertisement. You will also find a bunch of people trying to game the system. I call them relisting manipulators who keep increasing and decreasing the price of their property. This might result in the ad getting shown higher up in the results or something… but as a prospective tenant, it’s frustrating to look at the same crap all over again and again.
  5. It’s amazing how few ads have video walkthroughs of a flat. Literally, everyone owns a smartphone and it takes only a few minutes to put a video together. Ads without videos are probably a good way to identify lazy landlords. Some don’t even upload pictures – these listings should be excluded from search results by default.
  6. Rental agents are lazy as well. Often, they don’t call back when I leave a message to show interest in a property. Great customer service there… I’m sure it’s only a taste of what’s more to come if I actually ended up renting from them.
  7. I’ve seen ads that state “no agent fees” as if it’s some kind of a Unique Selling Point (USP). The law has made it illegal to charges such fees and it’s been in effect for years. How dumb does the landlord think I am?
  8. Many properties listed do not include an Energy Performance Certificate (EPC). I would like to know if I’m going to freeze in the flat or not – why do I need to call the agent/landlord to find out this basic thing. I think ads without an EPC should be hidden from search results as a default.
  9. Landlords can’t count on their fingers to save their own life. There are many ads out there in which one-bedroom flats are listed as two-bedreem flats… or studio flats are listed as one-bedroom flats. Learn to count!!! It’s not that hard. Also, a living room is NOT a bedroom.
  10. Is the ground floor the same as first floor? I have more confidence in the phrase ground floor but first floor can mean the same or the floor above ground floor. I guess this is a British thing… welcome to the UK!
  11. I hate basement flats. Why can’t I filter them out? Who wants to live underground like a rat? No, thank you!
  12. Some flats share bathrooms or washing machines with other flats in the building. This is unacceptable to many people. Why can’t I filter these flats out?
  13. I would love to know if there is a lift in the building. Not a difficult thing to add, is it.

Renters in London

Taking my ex-landlord to court

Find out how to make thousands of pounds by sending one email from this article. Yes, it’s that easy, as long as you rent from a negligent landlord (which most of us probably do!). I will share my experience and this will help add thousands or maybe even tens of thousands into your wallet and therefore get you closer to that FIRE goal!

There’s no need to learn a new skill, no long hours of number crunching and effort required. Simply check if your landlord has broken the law, if yes, then email them about it.

OK, I will dial down the sensationalism now.

I have found out that the security deposit for our previous flat was not protected within 30 days of us paying the deposit. This is breaking the security deposit protection laws and by law, a court must order the landlord to pay us 1x – 3x of the original deposit. We have sent “a letter before action” (actually an email to that effect), which was based on a template from Shelter to our landlord and gave them 3 weeks to respond. This letter is to start the process of negotiating a resolution outside of a courtroom. If we can’t agree on a resolution, then we go to court.

They waited until the very last working day of that 3 week period to respond to say that, yes they failed to protect the deposit in time etc and offered to pay us 1x the deposit amount. Quite good, if you ask me, for simply sending one email…

Their response had several factual mistakes in it, which I won’t share here, but there is no way we will accept the first offer. It looks to be a low-ball figure and clearly an attempt to get rid of us cheaply. The fact is the court would award 1x anyway as a minimum – why would I not go to court (other than the hassle of it).

For the record, we were renting from a very large faceless corporate landlord, who obviously knows the law but fails to have the necessary processes in place to avoid this type of thing. I have done lots of research and have discovered several other landlord failures of which one, on a successful claim, would have resulted in Rental Repayment Orders (as it sounds – they would repay us the rent we paid them). This is because they unlawfully let the property for a few months at the beginning of our tenancy (even though it was not safe to do so). However, that ship has sailed due to the 12-month window you have to claim for Rental Repayment Orders.

In short, they have failed to follow the law on a bunch of stuff, seem to be careless and reckless. In addition, during our second year of renting with them, we had lots of problems due to works/repairs. Back then I felt quite powerless as they simply got to walk all over us and do whatever they wanted – our complaints meant nothing and they were quick to hide behind the terms and conditions of our rental agreement. I’m quite glad to take them to court now!

The other thing I’m looking forward to is the actual court experience. I’ve never taken anybody to court and in short, the whole idea is a bit scary. However, I think it will be a very valuable experience. It can also end up lucrative if we get a good payout.

I will post updates as this progresses.

PS: I have discovered that our new i.e. current landlord has also failed to protect our deposit in time. I am not surprised at all… based on the previous issues we have had with the property.

The property market will crash (I think)

We have been trying to buy a flat for months and many months ago (August 2019) agreed on the purchase with the seller. It’s taken a long time to sort out some legal paperwork on the seller’s (the estate agent loves the word “vendor”) side of things. A few weeks ago, we got word from our solicitor that he has now finally received all the paperwork he needs to continue with the purchase.

However, Covid-19 happened and he asked us if we were still planning on to continue with it. At first, we thought that this is fantastic news and we should buy the place. After some thought, we got more cautious as the UK economy is headed into a massive recession, no-deal Brexit is more real than ever before and my employment isn’t that secure.

Yes, we’re lucky that both of us can continue to work from home but I can see business drying up in the coming months (although summer is always a bit slow). My girlfriend doesn’t worry as her job (in mobile gaming) is going well and her employer is making record sales as more people are at home and have time on their hands.

We decided that we should renegotiate the price on the flat and offered to buy the flat at a 5% lower price. The estate agent replied a week later and declined our offer as property only goes up in value (paraphrased and read between the lines a little). This was disappointing news and we decided to pull out.

Luckily it’s only £250, which we lost out on, which were some legal fees we incurred early on in the process.

I’m a bit of a crashist when it comes to the property market. We have 7.5 million people on furlough as of 10th May 2020. Most of them are earning less now (80% of salary up to £2,500 gross p.m. where the employer could voluntarily top-up to 100% of salary), which means there’s less demand to buy properties. Similarly, I predict, quite many of today’s furloughed staff will have no job to go back to in a couple of months’ time.

Unemployment is at 4% as at Feb 2020 but this is expected to double once we have the numbers available. This is not good for property prices.

Millions of people have requested mortgage holidays. A lot of people here are already unable to pay their mortgage, what’s going to happen in a few months’ time when the furlough ends? There will be defaults and people will lose their homes.

The estate agents such as Knight Frank and Savills etc have come out with predictions of 3% or 5% falls for the year, which will rebound in 2021 – what a joke. They have a vested interest in saying that things are all good and we should all be buying property left, right and centre. The fall in property prices will be significantly more than just single digits. This crisis is going to be huge as big parts of the economy are shut down.

How do you imagine the airlines go back to normal? The tube with wings where everybody breathes the same air is impossible to make safe for travellers. How do you do social distancing on a plane without big increases to ticket prices? I like many would be unable to fly to, say Spain, for a holiday if a condition of entry to the country was for me to self-isolate for 2 weeks on arrival. The travel industry will be in a new world of pain.

London has many AirBnb’s as well. Guess what, they’re empty because nobody can travel. That’s not going to change for a while. I expect these chaps will flood the market with either long-term rental properties or try to sell and get out of this business. We shall see. This is good news for lower rents and lower property prices.

What about a vaccine? Well, mostly the fact that it doesn’t exist. Even if it did, it would take many months to produce it and distribute it all over the world for everyone to feel safe again. I’m not saying they won’t find a vaccine or develop a cure, I’m saying it will take time, during which the economy will suffer.

OK, back to property prices. Some of the highest earners are in the tech sector – programmers and what not. They can work from home and many (e.g. Twitter) companies have already said they are happy for all their staff to continue working from home even after the plague. This has increased demand for homes outside of cities. Why would somebody on a six-figure salary pay £3,000 on rent in a Central London flat, if they could own a nice home outside the city? I expect a lot of high-earners to relocate further outside big cities where their money buys more happiness. This will drive prices down in big cities but increase them in smaller towns.

My friend asked me how long do I want to defer buying and paying rent for nothing. If I buy now, I’d still be building equity and have an asset. The problem here is that I’m not looking to buy a forever home. I’m not sure I will be in London long term. Therefore, buying now and selling within a couple of years may be very expensive if property prices crash. I could, of course, rent the property to tenants when I move elsewhere but that’s not something I want to do – I don’t have an overwhelming desire to be a landlord and deal with fixing boilers, washing machines and water leaks. It would also be difficult to re-mortgage a few years down the road if I was in negative equity and there’s a risk I’d end up paying more in interest.

Why take all the above risks? The only way I’d take these risks is if the upside was proportional to them. I’d be happy to buy if I got a price 20%+ cheaper than the prices in the pre-Covid-19 world i.e. in Feb 2020. I think it’s a bad idea to go ahead with a property deal agreed in the pre-Covid-19 world now that we are in the post-Covid-19 world. You should only consider doing that if you are buying something for the long term.

My plan is now to sit tight and adopt a wait-and-see approach. We also decided to move to a cheaper rental flat as living so centrally doesn’t have the benefits it used to have (everything is closed – cafes, restaurants etc, walking distance to work isn’t that attractive as we work from home). We are paying too much for the luxury of living in Central London in Lockdown London.

My employer has also said that they will take a much more cautious approach to get back to normal compared to any Government guidance as a big part of our clients are elderly and more likely to suffer health problems from Covid-19 infections. My girlfriend was told that they expect most of staff in her company to work from home until at least September 2020.

Taking all of the above into account, I think we have made the right decision by not buying the flat. I will keep you updated once this changes. In the meantime, we will continue to squirrel away money for an even bigger deposit.

Take care!

Happy new tax year 2020/21

Today is the first day of the 2020/21 tax year. I’m able to fund my ISA and LISA again as last year I managed to max out both of them.

So, this morning I topped up my LISA with £4,000 and invested it. I expect to receive the £1,000 LISA bonus payment around the end of May and will invest that once received.

Going forward, I will make regular monthly contributions into my ISA (remaining allowance of £16,000 as I just funded my LISA) and at some point when the markets are less volatile will use my GIA to fund the ISA as well.

I asked my ISA provider if it was possible to fund my ISA from the GIA with an in-specie transfer i.e. transferring the assets in the GIA into the ISA without having to sell them to cash beforehand. This would have avoided any potential issues with being out of the market, but unfortunately it’s not possible with my provider (not sure if any other provider would allow this). It was worth a shot anyway. Therefore, I’ll wait for things to calm down a bit.

I realize my remaining cash (or emergency fund) is now around £5,000, which means it covers about 3 months’ worth of my expenditure. I think I will prioritize adding money to my portfolio rather than increasing the cash level in the coming months as I believe markets present a good risk-reward ratio right now. So buy buy buy!

You might remember that I was planning on buying a flat with my girlfriend but the pandemic is making this more complicated. We have already agreed to buy a flat but there’s some kind of issue with the transfer of the leasehold, which has taken up at least 6 months already. Our mortgage offer will expire next month and I have a feeling banks will make it much harder to get a mortgage as they are likely to increase their deposit requirements. So, we might not be able to get another mortgage offer for quite some time. It’s not looking good and we’ve been thinking that property prices could come down as well… So we might be better off buying a bit later.

Enjoy the sunshine!

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