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 Covent Garden 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!

How I managed to get a refund for my cancelled Ryanair flights

Less than two months ago I booked a trip to Germany for a holiday during the Easter weekend. There was a festival/congress I wanted to go to. The plague wasn’t that big of a deal back then and it looked like it would all blow over by the time my holiday would come around. I also have a travel insurance policy and therefore felt relatively safe making the bookings. At least, so I thought. History has proven me very wrong.

image of the word cancelled

First, the event in Germany got cancelled as it had more than a hundred participants. Then the flights got cancelled and then the hotel booking got cancelled – all due to various lockdown reasons in response to the Covid-19 pandemic.

I requested refunds for all my travel bookings and didn’t have much trouble with the event and the hotel refunds. I also got a refund from Stansted Express as I no longer needed to travel to the airport. Only Ryanair was difficult as you may have heard from the media. It seems the company, along with other airlines, is at risk of going bankrupt if it refunds the money it owes to its customers.

My flights got cancelled on the 24th of March and I got an email from Ryanair with instructions on how to apply for a refund. I did that on the very same day. I was notified that it would take up to 20 working days to get a refund. My understanding is that legally they have two weeks to refund a cancelled flight, but given the plague, I thought giving them more time seemed reasonable.

A few days later on the 28th March, I got an email that said
“Due to the high volume of flight cancellations due to COVID 19, we are experiencing an unprecedented high volume of requests. We are currently working through the backlog and ask that you please bear with us. Please do not resubmit your request.”
OK good, it’s being worked on but it will take a little longer, which is reasonable.

9th April I get another email from Ryanair, which states
“As previously advised, our Customer Services Team are experiencing an unprecedented high volume of requests due to the COVID-19 crisis and we are prioritising our most vulnerable customers. This has been compounded by government public health restrictions on non-essential work travel which means we have less staff available to us during this busy time. Please rest assured your refund request is currently in the queue and will be processed. If you have selected new travel dates and would prefer to move your booking, please contact us. We appreciate your patience at this time.”
The please rest assured part sounded good to me and so I continued to wait.

On the 20th April instead of a refund Ryanair sent me a voucher, which I never applied for. The email read:
“Over the past months the spread of the Covid-19 virus has caused many EU governments to impose flight and/or travel bans which grounded over 99% of Ryanair’s flights. We are doing everything we can to support our customers, our people and protect jobs. We are ready to return flying when Covid-19 is defeated, hopefully sooner rather than later.
We regret that these Government travel restrictions have forced the cancellation of your Ryanair flight(s) under booking reference:: [my booking reference].

Please see below details of your travel voucher for [£££.££]GBP, the full value of your unused booking. This amount can be used for the purchase of Ryanair flights and other services at any time over the next 12 months. It is simple to use this voucher when making a booking on the Ryanair website or app.
If you do not wish to accept this voucher option and wish to move your flight or request a refund, please click here to contact us. Please note that as our customer care agents are required to work from home to limit the spread of COVID-19 virus, payment security restrictions prevent us from processing refunds as quickly as we would like to.

We invite you to use your voucher to book your next trip and we look forward to seeing you again on a Ryanair flight in the near future. Passengers who made their bookings using travel agents, or on line travel agencies should contact these companies from where they purchased their tickets to find out more about their options. Our priority always remains the health and well-being of our people and customers.”

Naturally, I was unhappy about receiving the voucher. I followed a link from that last email to see what I can do to request a refund. I found a small blurb which said:
“Can I receive a cash refund instead of voucher?
You can request a cash refund however bear in mind we will place your request in the cash refund queue until the COVID-19 emergency has passed. We highly recommend using the refund voucher as these are readily available and you can book flights on all Ryanair Group airlines in over 200 destinations in Europe and the Middle East.”

I have zero interest in using the voucher as it’s impossible to say when I will be travelling again. Also, the voucher would be worthless if Ryanair goes bust. I would also avoid flying with Ryanair whenever possible. No thank you, I want a refund.

There were no guidelines on how to request the refund on Ryanair’s website but they had a chat function, where I decided to try my luck (there was no phone number to call). That did not work as the chatbot (not even an actual human being) was not very chatty. After receiving no response to my query for more than an hour and I gave up on “chatting” with an algorithm to find a solution to my problem. This is a great example of appalling customer service.

Enter section 75 of the Consumer Credit Act.
“Under Section 75 of the Consumer Credit Act, your credit card company is jointly liable if something goes wrong with a product or a service you’ve paid for by credit card. You can potentially claim for any breach of contract or misrepresentation by the company from which you’ve bought your goods.” [according to Which?]

I called my credit card company (Bank of Scotland) and asked what I need to do to lodge a section 75 chargeback claim. They gave me a claims phone number I needed to call – they weren’t that useful as they could’ve just transferred me to the claims number, but I guess they just wanted me off the phone.

I called the claims number, explained my situation and was given an email address to which I needed to send evidence to support my claim. I emailed them all the email correspondence I had (I printed pdfs of each email I had), the flight itinerary and the voucher email that same day (20th April).

A few days later on 23rd April, I got a “temporary” credit applied to my credit card. The bank refunded me the money and said Ryanair has 45 days to dispute this transaction. If they do, the temporary credit might be removed, if they don’t it will become a permanent credit.

I was surprised by how quickly the bank worked. A part of me was sceptical as I thought the section 75 claim wouldn’t work. Normally this claim is used where a company is refusing to make a refund, however, Ryanair never refused – instead, they vaguely said it will happen in the future after the pandemic. However, Ryanair also misrepresented in the refund process – they said my refund was being worked on and then sent me a voucher, not a refund. This is misrepresentation and therefore the section 75 claim should stick. I will let you know if anything changes on this front.

However, for now, things are good as I got all of my holiday bookings refunded. It took about a month, a few emails and a section 75 chargeback claim – but it was worth it.

Happy days!

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Everything wrong with Thailand

I have only spent 2 weeks in Thailand and my experience was limited to Phuket and Bangkok. This post is not a comprehensive analysis of Thailand – it’s simply my experience.

The cornerstone of a strong economy is trust. However, trust in Thailand is somewhat of an issue. One big example I saw was the massive use of fictitious prices (where you always need to haggle) – I could never trust listed prices. Another “trick” taxis used was to list prices and not specify that these were per person and not for the ride. The mentality seems to be that you’re a sucker if you pay the advertised price.

One annoying thing was the taxi mafia, who have claimed various territory and other taxis are unable to pick people up from the “wrong” territories. This means that if you had a longer journey booked, you would effectively have to pay for the journey to your destination and back as the cab driver is unable to pick up any customers from my destination. It also bothered me that one taxi driver kept his hat on the meter during most of our journey, preventing us from seeing the price. This all left me with a bad taste in my mouth.

Similarly, at some tourist attractions, they charge foreigners more than locals. One example was The Grand Palace in Bangkok where locals had free entry but foreigners had to pay £12 (500 BHT). This kind of discrimination rubs me the wrong way and if Thailand wants to be in the 21st century, they should end this practice.

Another example is the lack of trustworthiness. When we booked a taxi in advance to take us to the airport, it simply didn’t show up and nobody made an attempt to notify us. We had to book an alternative taxi. Similarly, we stayed in a hotel which advertised they have reception open 24/7. However, when it came to our check-out time (around 6 AM), nobody was at the reception and nobody picked up when we called the numbers on the door to contact staff. We had to say goodbye to our room deposits. I hope the scum hotel staff buys themselves something nice.

I also heard a lot of stories about getting scammed when renting something as they’d claim there’s damage to the scooter/jet-ski/car etc and you could end up with massive bills to pay. I heard the police seemed to always side with the locals in this kind of matters, which means it’s better to simply avoid renting anything.

I’m sure you have heard of geo-arbitrage i.e. moving to a low-cost area when retiring so that your money lasts longer. However, based on the above, I would not recommend Thailand as the destination.

Haggling

Alright, I’ve made my way to Phuket, Thailand. The journey was long and I’m happy to have arrived.

Most of the journey was with Qatar Airways, which was my first experience with them. They flew me to Doha, Qatar and after a 90 minute gap I connected to another flight to Bangkok, Thailand. I got a very positive impression of them – the staff called me “sir”, each flight included a meal with drinks (I always opted for Heineken beer) plus teas and coffees. None of that cheap budget airline shopping or lottery ticket crap required.

The staff asked me if I enjoyed my meal and later one girl took an interest in the book I was reading and asked me about it. The overnight flight provided an eye mask to hide any lights, earplugs, a toothbrush and toothpaste and of course a pillow and blanket. This was all very nice.

The onboard entertainment was good – I watched three movies, listened to music and enjoyed my book. I could get used to this…

I met up with my mates at the airport in Bangkok. And within 2-3 hours we were on our final flight to Phuket. That was a short journey (1 hour in the air) with a very cheap budget airline. It was nowhere near as nice to my previous two flights but OK due to the short duration.

We got to the hotel, which is a bit of a dump. We expected better but maybe it’s what it should be for £33 a night in a twin room. For example the bathroom seems to be someone’s “project”. The showerhead has been plastered or fixed an ungodly amount of times. I’m too scared to adjust it as it’s likely to fall off the wall. We have similar issues with the tap over the sink – the metal tap part hasn’t been secured to the porcelain sink. So every time you turn the tap the entire thing moves. Also, the picture on the TV is horrendous – how do you mess up that? Finally, the walls seem to be very thin – we can hear all the noise from the hallway and neighbouring rooms.

Those things aside, we have a working air conditioning unit and water comes out of the tap.

After making ourselves beautiful, we decided to go check out the beach. As we walked, we discovered how dirty and smelly Phuket is. I expected it to be more Westernised as it gets many tourists but I was wrong. We also decided that we need to buy some travel essentials – beach towels, flip-flops, sunscreen, sunglasses etc.

It wasn’t easy to find flip-flops for my size 45 feet. They didn’t have anything my size in the first few shops. Somehow, as a joke, we decided to haggle with the price when we kinda found something we’d like to buy.

Haggling was very entertaining. For example they asked for 450 THB for flip-flops, I say 250, they counter with 350, I say 275, they say “350 is good price”, I start walking away and then they drop it to 300. I didn’t buy, it was good fun though as we discussed what our next offer would be each time they moved on the price. I did the same in two more places as they priced flip-flops similarly.

Eventually, I ended up with flip-flops at 120 THB (£3) where the lady asked for 150 THB (£3.75) originally from a shop a bit further away.

Out of curiosity, I walked into a few tailor’s shops as well. I wanted to know if I was able to snatch a bargain custom tailored suit for myself.

The first tailor was a poor fit as the chap struggled with English and I didn’t feel comfortable doing any business there. He said good suits start from 6,000 THB (£150).

The second place was similarly priced but the chap had decent English. I spent at least an hour there talking about suits, styles, materials, sampled fabrics etc. I had a much better feeling about this chap even though we noticed he had a massive cockroach roaming around in his shop as we discussed business. He said it would take about a week to get the suit.

His initial price for my selected suit with Polish linen was £200 (the alternative with the cheaper linen material would cost £145) but I got it down to £175. He took my measurements and I gave him a deposit for half of the cost. I will need to come back in two days for “fitting” and then later again to pick up the final product.

In retrospect, I think I should have paid a smaller deposit and visit another two or three tailors before making my consumer purchase decision. Although the Polish linen felt much thicker and the texture was nicer, I’m not sure if it actually is any better or should be more expensive than the thinner type of linen. I will keep you posted.

I must say, although haggling started as a joke and that normally I feel hugely uncomfortable when somebody suggests I should try to get a discount on something, I had a lot of fun and it was so easy. I think the locals expect it and everything is up for negotiation.

Try some haggling, I’m sure it will help you on your FIRE journey. You might even have some fun with it.

My most stressful holiday

As part of my FIRE strategy, I try to keep my expenditure relatively modest. However, this year I’ve got a big holiday coming up. It’s something I’ve been thinking about for quite some time but never pulled the trigger. It’s OK to treat yourself every now and then. #SelfCare

I’m due to go on holiday to Thailand but as you can tell by the title of this post, things aren’t exactly going my way.

For starters, I needed to get various vaccinations done before leaving the UK. That was annoying as I booked an appointment with my GP, but should’ve really booked a nurse. For some reason, GPs are incapable of operating a syringe it seems. Therefore, I had to return to the GP surgery on another day and take time out of my working day. To make things even worse, I wasn’t seen until 20 minutes past my appointment – this makes me wonder why we even have appointments if these aren’t being followed. I can’t imagine a client coming to my office for a meeting and then not getting any updates or apologies/explanations why they can’t see whoever they arrived to meet. I believe poor service is just the way the public sector operates these days. They clearly have no incentive to improve because where else would people go for “free” healthcare. It’s not really free as we all chip in with our taxes… I wish it was possible for me to opt-out of the NHS and put that money to use in a more productive way.

I hadn’t had any vaccinations in more than 10 years and felt like a stray dog picked up from the rain outdoors when I was talking to the nurse. I got three jabs for 5 diseases and a resulting sore shoulder for a couple of days. Apparently I need to return again in 6 months for another Hepatitis A dose to get immunity for something like 25 years or so…

Not long after my GP visit, we had the Ukrainian plane crash near Tehran. It wasn’t just a crash – the Iranian army shot it down after the Americans murdered some kind of Iranian general who nobody had ever heard about. Guess who’s flying over Iran soon?

My trip to Thailand is with Qatar Airways, who fly to Doha, Qatar and then I need to make a connecting flight to Bangkok, Thailand. Apparently it is not possible for Qatar Airways to avoid the Iran/Iraq airspace, unlike other carriers, due to political differences between Qatar’s neighbours. Many other carriers would simply fly over Saudi Arabia.

My worried brain started a mini-panic and looked into my cancellation rights and stuff but I didn’t find anything useful. Luckily, over the next following days, things seem to have normalised in that part of the world. All that stress for nothing.

And now, the big issue with Asia is the coronavirus situation (pandemic?), which is giving me a headache. The latest news was that Thailand had 19 confirmed infections of this new virus. No doubt that this will increase in the coming days and weeks. Should I travel and risk contracting a deadly disease (it seems it mostly kills only old and frail people) or call the whole thing off and have a staycation instead? Why can’t this be easy? Aren’t holidays supposed to be relaxing?

I really hope that everything sorts itself out and that I can go enjoy my trip but so far it’s been nothing but a source of concern. I want to read something positive about the situation for a change and am tired of the sensational clickbait articles.

In other news, it’s Brexit day and a few minutes past 11 PM in London, which is when we “left” the EU and our transition period started. Let’s see how all this plays out.

I expect to spend a bit of my cash reserves on my holiday, but it’s manageable and only a one-off event. It will be OK and I will be soon back to normal with my monthly contributions to my portfolio.

Good night!