June 2022 – drawdown breach!

June was gloomy.

Not in London, which is lively, crowded even – and a delight to see. Pavements are busy, restaurants are proving tricky to get bookings in, the river is heaving. I even managed to get to ‘the beach’:

Sand, tides, sunshine – locally in London

I managed to spend a bit of time down around the Coastal Folly too. I’m still finding my rhythm having two homes but so far it is going pretty well. A London kitchen project is running late / badly which gives us plenty of excuses to be down by the coast.

Sandbanks, tides, sunshine – down by the coast

The UK saw a week disrupted by rail strikes but with Working From Home now an option and so many cycle/etc options it didn’t feel too disruptive for me. It was interesting though how positively the union leader Mick Lynch came across in the media and I think if we do find ourselves in a year of employee-driven strikes he will deserve the credit/blame for it. The RMT appears to be asking for about 9% pay increases for train workers. Drivers are coming up next, apparently, along with GPs (asking for 30%!). We are rapidly getting away from ‘inflation is just spiking up temporarily’ to ‘well, if they’re getting it, then I want it’ and that could take years – and a much more competent government – to shake out.

And it is this inflation gloom which is suddenly pervasive. Not just in the UK, though the UK does appear to be taking a particular bruising. Markets got hammered in June and, lest anybody forgets, they hadn’t had a good run of things earlier in the year either.

Continue reading “June 2022 – drawdown breach!”

Buying a 2nd home for nothing

A Coastal Folly

One thing has, after all, led to another. Against many years of better judgement, Mrs FvL and I have taken the plunge and bought a second home on the UK’s south coast. Our Coastal Folly.

This blog post tells the story of how I’ve paid for the Coastal Folly. I’ve surprised even myself with how it’s happened.

The Coastal Folly is expensive. Well over £2m of property. It is not a little 2 bed cottage 20 minutes drive from the sea. It is a premium piece of real estate, with uninterruptible sea views.

As a second home, it attracts additional stamp duty (the property transaction tax payable in cash to the government at completion) – for this value of property my stamp duty is well over 10%. A lot of people I know froth at the mouth at this level of stamp duty. Not me. My portfolio has benefited from low investment taxes. And most of what I spend my money on incurs 20% VAT. So having to shell out 12-13% purchase tax on a discretionary purchase, using money that has been taxed at 0% or 20%, doesn’t feel unreasonable at all to me.

Continue reading “Buying a 2nd home for nothing”

2nd homes: folly or fantasy?

I spent a fair bit of the summer thinking about second homes. At times it seemed as if every second person I knew had a second home – with plenty bought since lockdown started, as a getaway from urban London. They are (see map below) for the most part 2-3 hours drive form London; the Cotswolds just beyond Oxford and the Poole/Bournemouth coast in the southwest are particularly popular among my London circle.

I have had longstanding views on 2nd homes, so I found James Max’s summer FT article to be very thought-provoking on the topic.

Locations of 2nd homes of friends of mine

2nd homes as hassle and/or social problem

James Max starts with my position – that 2nd homes are fundamentally a hassle. Complexity. Things that can go wrong. Costs. An asset that is more of a liability. Like James, I don’t see myself letting a home out, via AirBNB, VRBO or the rest – so I wouldn’t see any income to offset the additional council taxes, utility bills, and occasional maintenance to deal with. Builders to find, gardeners and cleaners required.

Continue reading “2nd homes: folly or fantasy?”