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Saturday, 28 November 2015

The Money Pit

I was thinking of buying a second home - an euphemism for a "buy to let". I got as far as getting a mortgage offer from the Halifax.

I'm now not going to.

I could say that it's because of the tax changes coming into force. Different rates of stamp duty and treatment of interest payments for "buy to let" mortgagees, but that would just be cover. No, frankly I can't be arsed. 

It all started when I discovered that you could buy a 2 bedroom Grade 2 listed Georgian property for £166,000...in Wisbech. The reason why Georgian properties are so cheap is that history has beached Wisbech. It has no railway, no motorway, no roads to speak of and no high value businesses.Many of its High Street shops are charity shops.  30% of its population are Latvian or Lithuanian, earning low wages. It is a Georgian town stranded in a depression.

But...the houses are fabulous.I love Georgian homes, but to buy one in London would be prohibitive. I have some free cash so I thought I'd buy a Georgian house in wilds of Cambridgeshire.

Except we wouldn't move so I'd buy it and rent it out...in Wisbech. Anything goes wrong I'm 3 hours away by car: I wouldn't trust letting agents. And having bought the house of my dreams I'd let it out to a load of drunken Slavs...The internal inconsistency of my dream shattered it.

Then someone mentioned Buxton. On the edge of the Peak District, lots of history and an annex of Derby University is there. Holiday lets, students, even lecturers and it is cheap. Except no Georgian properties I could afford, but as a business proposition it was a goer.

I'd identified 6 or 7 properties and spoke to the estate agent fully prepared to drive up to Buxton and spend a couple of days looking over the scene. It's a nice place, the properties I identified were central and the rental income looked sustainable.

I had planned to go up last Monday and Tuesday..but didn't. The weather wasn't too good. And the property I had my eye on: well it needed a new roof. That set a whole series of scenarios going in my head. I might be able to fork out £70k or 80k as a deposit but if the property needed major work...and the on going costs.

It's been raining heavily recently, exposing the faults in our guttering. We will need some major work there. Frankly that just reinforced my fears over committing our money to Buxton. Anyway I saw a new project, closer to home. Replacing all our plastic guttering with the genuine or near genuine Victorian type. That'll cost an arm and a leg, but it would be money spent on our house.

So my very short lived dream of being a landlord has ended.

The fatal flaw was mission creep. The initial aim was to own a Georgian property I could afford: a laudable ambition. It would mean being a landlord because we wouldn't sell up and move. Somehow the original purpose - owning a Georgian property turned into becoming a "buy to let" landlord in a town 3 1/2hr drive away. Really, really silly.

I hope our Prime Minister reads this.

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