Hello and welcome back to Mortgage Advisor on FIRE. An update on my BTL, and some thoughts on a possible increase in the ISA allowance.
Weekly Update
I had my first appointment with my new psychologist this week and it was largely positive. I had a much better vibe from this person than I did from my previous therapist. It was mostly just introductions and an overview of the sort of stuff we’ll be covering going forward. I’ve got my next few appointments in and I’m hopeful it will help me climb out of the dip I’ve been in for a few months.
On Friday evening Oana and I attended a talk at the University of Sheffield; In The Realm of The Dark Rabbit.
It was a lecture focusing on the role, and history, of tricksters, fraudsters, and pranksters. It was interesting and entertaining in equal measure, and if you get the opportunity to attend the talk on another date I would highly recommend it.
I was supposed to meet up with a friend this week, but that had to be postponed as I needed to wait at home for a parcel to be delivered. I was expecting the parcel on a different date, but one can never rely on delivery companies to be accurate; where would the fun and uncertainty be in that?
Much of the week has been spent either reading, listening to audiobooks or podcasts, and bingeing on MasterChef on the iPlayer with Oana. The latest series of MasterChef: The Professionals is on the BBC at the moment, and in between waiting for new episodes we’ve been smashing through previous seasons of Celebrity MasterChef that we missed during their original run. I’ve also been a sounding board for Oana as she looks for a new job now that she is unexpectedly out of work.
In recent weeks we’ve had a number of issues crop up with our BTL property. You may remember from previous years how we’ve had to spend thousands repairing damage from previous tenants, and now we’ve had two significant problems arise; the conservatory roof is leaking, and the boiler has packed in. Once more we are going to have to spend money on repairs and replacements.
I spoke with my investment partner about the property and I went back to a spreadsheet I’ve kept from day one of owning the BTL. In this spreadsheet, I’ve itemised all the cash we’ve had to spend on the property, as well as all the money we’ve made from the property. Including the cost of replacing the boiler, but not including the conservatory as we don’t have a quote at the time I’m writing this, we are down approximately £35k. Now, it’s not as disastrous as it first appears because we have equity in the property. If we use the lender’s estimate for the property valuation, we have around £40k equity. Sales history for properties in the same area suggests that £40k-£45k equity is about right. We now have a decision to make about the long-term viability of this property as an investment. We are of the view that if we can sell and walk away with £20k each after paying the relevant taxes, fees, and whatnot, then we’d be happy with that. We’re not going to make any immediate decisions, but in the new year it’s something we are going to have to seriously look at.
Landlords get a bad rep in the media, as there are many who believe you shouldn’t make profit out of housing. I understand that argument, to an extent. However, if we take that point and develop it to a logical conclusion, then surely it’s not right for someone to lose money on property due to tenants abusing that property. There is a place in society for private landlords who can offer housing to people who don’t want to own a property. It’s often a point that is overlooked; not everyone wants to own a property. Some people want the flexibility of an AST rather than ownership. Some people want to try a new living arrangement, such as living with a new partner, or a new area, without wanting to own a property. Then, there are those who only plan to live in an area for a few months to a few years, such as trainee doctors or military personnel who have to move around the country for work. There are many instances of people who need the flexibility of rental housing, and it’s not fair to just label all landlords as greedy or immoral. Yes, landlords want to make money, but if they’re paying their taxes and providing safe, quality housing at a fair price, then is that a bad thing?
How To Support Mortgage Advisor on FIRE
If you would like to show your support, please consider donating to my virtual tip jar at my page on Buy Me A Coffee. You can use the link below, or click on the picture to be taken to my supporter page.
https://www.buymeacoffee.com/davidscothern
Alternatively, please consider sharing this blog on your social media. Shares are the most valuable commodity for any blogger and the most difficult thing to earn.
Thanks, as always, for your interest and support.
What Am I Doing?
TV: Masterchef: The Professionals and Celebrity MasterChef.
Audiobook: The Institute by Stephen King.
Financial Update
Assets
Premium Bonds: £11,600.00.
Stocks and Shares ISA: £59,303.92.
Fuck It Fund: £11,772.50.
Pensions: £64,186.28.
Residential Property Value: £227,512.00.
BTL Property Value: £146,814.00.
Total Assets: £521,188.70.
Debts
Residential Mortgage: £174,663.01.
BTL Mortgage: £104,937.56.
Total Debts: £279,600.57.
Total Wealth: £241,588.13.
Investment Income in 2023: £7,393.55 (target £8,500).
My investment income continues to grow for this year, and there might be some signs of longer-term growth in the stock market with inflation starting to fall. One important point to remember, and it’s a simple point that I see people get wrong time and time again. Inflation coming down does not mean things get cheaper. It means that things are still getting more expensive, just at a slower rate than before.
If we do decide to sell our BTL, as is looking likely, in the new year it will have a massive impact on my investment income projections. The equity I walk away with will be reinvested, but the great thing about BTL is that you earn income on money leveraged from the bank.
My pension pot has hit a new all-time high and hitting these milestones always feels good. The next big milestone is getting my pension and ISA to £100k each. One thing that would really help would be an increase in the annual ISA allowance. Following on from the Autumn statement from the Chancellor, there have been rumours of an increase in the works with anything from a £5k increase to £10k mentioned. Although an increase of £10k would be amazing for some people, the true number of people it would benefit would probably be fairly small.
Roughly speaking there are approximately 12 million ISAs in the UK, of which the total balance is approximately £70 billion. Data from Gov.uk shows that the vast majority of people who subscribe to an ISA don’t get anywhere close to maxing out the existing £20,000 allowance, with figures from 2017/2018 suggesting almost half of those who invest in an ISA saved no more than £2,500. The main group that would benefit from increasing the ISA allowance are those who earn over £150,000; that’s why the Tory government will probably do it.
Disclaimer
The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.
If you want personalised financial advice, seek an appropriate professional. If you are in financial difficulty, seek advice via the resources below:
Biolink and other links
You can now find all my social media pages by checking out my Biolink:
bio.link/davidscothern.
Also, check out Darren Scothern’s blog which talks about autism, being autistic, and general mental health:
If you want to show your support for my FIRE blog, please Buy Me A Coffee at the link below:
https://www.buymeacoffee.com/davidscothern