Wednesday, 27 February 2013

Italy 0 : Germany 1

I've run projects from 900 miles away, but never before from 9000 kms.

Perhaps the hardest part is the time difference. We're 8 hours ahead here in HK, and that plays havoc with communications and decision making.

Earlier this week, for example, I was seriously let down by the kitchen company I'd chosen for our small Chelsea renovation.

Suddenly, after weeks of work on the design, the Italian makers, Cesar, said that a fundamental part of the kitchen couldn't be done.

I had paid the deposit and placed the final order over two weeks ago. The finished cabinets with a rather special cement finish were due to be fitted in about 6 weeks.

Cesar's only solution involved not just a major compromise on the style of the cabinets, but putting my order at the back of the queue again!

So I'd have to wait 9 weeks for a kitchen that was going to be a compromise. A compromise caused by Cesar - they had after all seen and quoted on the detailed designs.

It just didn't make sense. And I was convinced that a German maker would have accepted that it was their mistake, and made every effort to deliver on the original schedule.

After a few days of emails with my project manager and the kitchen company, I did in fact switch to a German manufacturer.  They can deliver from scratch in just 4-5 weeks. Guaranteed.

But it's an enormous headache doing it all from here, as I can't see colours properly or finishes or designs. And replies to my emails often don't come back until the next afternoon (my time).

You'd think that the Italians might be keen to get the business given the recession in their country, but no. They didn't even offer to push their delivery date but so much as a few days.

So now, the kitchen and all the appliances will be German.

I guess that's the story of Europe in a nutshell.

Sunday, 24 February 2013

A Doer-Upper View from Hong Kong

There were two big events in Hong Kong over the last week.

My stepson's engagement party.

And a dramatic rise in local property taxes.

Fabulous though the party was, I'll spare you the envy a full description would inspire and focus on property.

On Friday the government shook local speculators (that's investors to you and me) by doubling stamp duty on properties above HK$2m (£170,000) for non residents, corporates and various other classes of buyers.

At the same time, they imposed the first significant tax on properties under HK$2m.

Unlike the UK, they didn't pause to test public reaction to this proposal, or even run it past parliament. Within just 24 hours the new taxes were in place.

This resulted in an almighty scramble to sell (and buy) properties before the new taxes took effect. Literally hundreds of sales went through in one day - mainly new builds.

The government also imposed strict new controls on lending criteria to make mortgages harder to obtain.

It's all designed to take some of the heat out of a property market that's recently made London look like a sleepy backwater in terms of price rises.

As I stood, terrified, on a wind whipped 50 square metre roof top thirty two floors above the city at Saturday night's party, it was soon apparent how obsessed locals have become with property prices. Instead of pointing out the extraordinary night-time sights across the island and over in Kowloon, they were busy discussing the relative value of the multitude of apartment towers lit up around us. " Over there is some of the most expensive real estate in Hong Kong, isn't it fantastic", someone said as they pointed to yet another typically thin, tall, stalk of a block.

It's an obsession the government here is clearly worried will turn into a disastrous 'bubble'. Hence this week's new taxes.

I love HK for two reasons. It's home to my stepson and his future wife. Take those away and I probably wouldn't come back, if I'm honest.

These days the city itself is pretty much one large designer shopping mall with offices and flats stacked on top. Pollution from China's nearby industrial cities (denied by the authorities) means the skies are rarely clear. And, apart from very cheap taxis, the cost of living seems to have spiralled to near UK levels.

It has its good points, of course. It feels safer than London. There is no apparent 'yob' or 'booze' culture. The people (both western and local) seem hard working, aspirational and smart. Help, in the form of maids and nannies, is cheap. And, apart from property, taxes are unbelievably low.

But would anyone live here from choice, as opposed to economic necessity/desire.

Even my future step daughter-in-law (is there such a thing) is thinking of moving when they eventually decide to have a family. She simply doesn't see HK as a place to bring up children any longer, and as a very successful businesswoman she has a choice.

If you're young, I guess the fast pace,  thrusting energy and relentlessly materialistic atmosphere  is a 'buzz'. And certainly, placed as it is at the edge of mainland China, there's a sense that this is the future, the real epicentre of global trade and power.

But as I sit beneath the towering stalks (like a modern day San Gimignano) I long for the humanity of a London square or the elegance of a Paris boulevard.

You might make money somewhere like this. Or in Kuala Lumpur, or Singapore or Dubai (you name it). But where will that money choose to gravitate when it wants to educate its children or simply wander quieter streets and live in bigger spaces with patches of garden.

Well, one of those places is London, of course.

Why pay £10m to live on the 30th floor of a tower, when in Egerton Terrace £12m will buy you stucco fronted elegance, 4000 square feet, maybe a basement pool, certainly a garden of your own and the chance to step out of your own front door and wander round to Harrods or Harvey Nics for a spot of retail therapy.

That's why I hope the idea of a mansion tax remains only an idea.

Hong Kong may need to cool its property market with higher taxes, but I'm not sure London has the same issues. A few developments like the new Battersea power station aside, price rises in London seem driven by real demand rather than by hysterical speculation. People are buying into the place as much as the market.

In the absence of the same cut-throat commercial environment as modern, largely Asian, hubs London's main hope therefore is to retain its appeal as a place to live (or at least own a home).

I fear that charm and character and multiculturalism won't be quite enough if we punitively tax these wealthy world wanderers.

And that would be a disaster both economically and socially.

Still, must go. Have to grab a cheap taxi round to my stepson's flat for supper on his 22nd floor roof. (Don't they know I absolutely hate heights!!)

Tuesday, 19 February 2013

Small house. Big complications.

Readers of my last post - The £8000 road block - will know that things have not been going entirely smoothly with the purchase of our second Doer Upper, a tiny end of terrace house in one of W8's best streets.

By 4pm yesterday, I had really begun to think it would all fall through.

Both I and the sellers had given our respective solicitors a deadline of 5pm to exchange, beyond which we would not go.

Fortunately a compromise (I paid £7000 I didn't expect to) was worked out and exchange did finally happen.

Its been a complicated and tortuous process getting this far. But that is nothing to what the next stage might hold!

This house hasn't been touched in 30 years. Water pours in through the roof. The basement is so damp its practically a swimming pool. The whole terrace end wall is coming away from the house. Big, worrying cracks are gradually widening all over the place. It's a major wreck.

Enter at your own risk.

It's a hugely desirable wreck, however.  And when it hit the market dozens of newly minted yummy mummies were queuing for their viewings side by side with dodgy developers.

The attraction was the price. It looked cheap, even with the very obvious costs of a major refurb.

Opposite, a rather bigger house had recently sold for over £7m. Down the road, you're looking at
£4m + for a classic stucco fronted terraced property. So how come this one was listed at under £1.5m?

Its size (lack of) is part of the reason, as is its state of disrepair, but mainly it's 'cheap' because it's very complicated.

A cracking opportunity.

The asking price bought you the remaining 26 years of a lease. On top of this you needed to buy the freehold from some apparently willing sellers. And then you needed to spend a great deal of money completely gutting and expanding it.

The problem was valuing that freehold. Buyers had to make an offer for the lease without a firm, agreed price for the freehold. (There's no agent representing the freeholders.)

There was also nothing in writing to say the freehold was even actually for sale.

It's hard to predict what the council will allow in terms of 'expansion'. Like much of the Royal Borough, the house is in a conservation area and part of a very small, very cute terrace. There's not much scope for obvious extensions and without an extra 300-400 square feet, it really is very, very small.

The risk, for a developer, is that you'd spend a year and a lot of money making very little profit.

Tricky. Risky. And as I have said (several times) very complicated.

Still, the potential buyers were literally queuing outside. So I didn't hold out much hope of being able to  get it at a reasonable price.

Gradually, however, over the next few weeks, many potential buyers fell out.

Overseas buyers were confused and worried by the complexity of a short lease (I don't blame them). So they were out.

That left two sorts of buyer - developers and young Notting Hill couples starting a family and desperate to move out of flatland but stay in the area.

Developers like to leverage their investments with debt. They also like a very clear idea of costs, and a fairly guaranteed ROI of 30-40% minimum.

It's hard (well nigh impossible) to arrange debt on a complicated transaction like this and, with an unknown freehold cost and question marks over planning consents, the potential profit is unpredictable. So that was another bunch of buyers out of the game.

This left a few cash rich, small-time, hobby developers and a few young couples trying to buy a house on the cheap in an area they couldn't really afford.

Once again, many of these young couples didn't really have the cash. They may have had "agreed" financing but that's very different to having cash in the bank. And agents know this only too well.

These days it can take 8-10 weeks to get even a straightforward mortgage finally agreed. On a complicated scenario like this one, it could well take a great deal longer.

So the agent had to find someone with enough cash immediately available to buy the leasehold, acquire the freehold and then refurbish the house.

With international clients sacred off, most developers put off and mortgage dependent buyers ruled out, that didn't leave so many in that queue.

Just us and two or three other contenders went forward to the so-called 'Best and Finals' offer stage.

There clearly isn't a science to these bidding situations, but there is perhaps a bit of an art.

My buying agent (or she who must be obeyed, as I think of her) believes that a buyer's relationship with the estate agent is almost as important as the price in a bidding war. And, as usual, she may well be right.

Between us, we spent an inordinate amount of time just listening to the agent, getting to understand the situation and explaining our own position.

We still didn't know how easy it would be to buy the freehold, or exactly what it would cost. But we decided to go for the lease and worry about that later. We could always pull out before exchange if the freehold became too expensive or elusive.

Along with our bid, we presented copies of bank statements showing the cash available and made clear our ability to proceed immediately.

It might have been a bit boring, but it paid off.

Our bid was accepted.

For the second time running, we won a sealed bid. (Either we're overpaying, or we're quite good at it.)

That was almost 3 months ago. And we've only just exchanged on both the lease and freehold. Because a few days later it all became even more complicated!

Sadly, the elderly owner of the leasehold died. And the dreaded state of PROBATE became a party to the negotiations.

Well, nobody said this Doer Upping lark was going to be easy. And now I know why!

Monday, 18 February 2013

The £8000 road block.

Last Friday morning I expected ( after weeks of hold-ups due to the sellers solicitors)  to finally exchange on a small terraced house in Kensington.

The deposit was in my solicitors account.

My partner in Hong Kong had given his go-ahead.

The contracts from both the leaseholder and freeholder (for this is a complicated transaction) were ready.

All my solicitor had to do was complete the papers and despatch the monies. Or so I thought.

Then the phone rings in the car (I'm out buying bathroom stuff for our other property). It's my buying agent. And no she's not ringing to congratulate me.

There's a problem.

A roughly £8000 problem.

Apparently, I am expected to pay the freeholder's legal and surveyor's costs.

This is news to me and to my solicitor.

It's not mentioned in any papers from any party to this transaction.

So, not surprisingly, my solicitor and I bat back the issue and say - this isn't our problem.

Oh but it is!

It's now Tuesday and the issue still hasn't been resolved.

We don't even know how to resolve it. It's a sort of Catch-22 situation.

Solicitors for the other parties don't answer emails. Estate agents try to cover their arses (they should have mentioned this months ago, but didn't). And nobody tells us actually how to sort the problem.

We discover eventually that £5000 is the fee for a surveyor to value the freehold on our behalf. But we didn't commission the survey and have never seen it (even though we requested a copy months ago).

Nobody even seems to know who was billed for the surveyors fee! So how can we pay it?

It is, in the immortal words of somebody, a 'buggers muddle'.

And one that was completely and utterly avoidable.

These so-called professionals aren't remotely professional. We still, for example, don't know actually how much money were talking about. The agent bandies around some rough figures (with or without VAT, I don't know). But there are no actual numbers, no actual papers, no actual requests in writing for the money.

It's f....g unbelievable.

How these people ever qualified as solicitors I don't know.

The people I feel most sorry for are the beneficiaries of the sale (it's a probate situation). Through no fault of their own, they have inherited a shocking bunch of lawyers and agents.

If they ever see any money during their own lifetimes, I'll be surprised.

In the meantime, I'll wait to see what today brings. But to be honest, I don't deal well with stress or incompetence on this level. And if it goes beyond today, I am committed to pulling out even though it's a great little house at what is probably a good price.

I just don't need the hassle.

Tomorrow I'm off on holiday for two weeks. I'll either be celebrating the purchase. Or recovering from walking away.

We'll see.

Tuesday, 12 February 2013

Under Starters Orders

Those one or two people (ok, maybe one) who actually follow this blog may have wondered why I've failed to post anything for over a month.

Well, the tension here at Doer Upper Towers has been such over the last few weeks that my fingers became bitten so ragged it was simply too painful to type. (Alright, so that's a slight exaggeration.)

The reality was that there was N.O.T.H.I.N.G to report.

Until yesterday, when the initial strip-out of our first property finally got underway.

It's the start of an 8/9 week programme to gut and totally refurbish what is effectively ONE room.

Getting to this point has been extremely stressful, but not without its upside.

First, though, the stressy bit.

Two weeks ago I finally 'let go' our interior 'architect' and instead hired someone I hope will be more useful, a project manager recommended by my business partner (and stepson).

In other circumstances, I'm sure the interiors guy would be great. But it just didn't work for me. The ideas weren't very exciting, the detail wasn't there and the wasted time horrendous.

At Christmas he'd produced a 'spec' for the refurb that had as much detail as a politician's manifesto. In other words, none. The builders we'd chosen couldn't quote. The managing agents couldn't issue a license to alter. And I couldn't have been more embarrassed or irritated.

By mid-Jan the specifications had developed a bit. Not fully, but enough to start getting builders to quote. And make a little progress with the license.

I had set a very tight overall budget, knowing we'd go over it but hoping to limit the excess.

The first builder to quote went over budget by 225%! Totally ignoring the spec, he added all kinds of stuff I just didn't want (or wouldn't be allowed, such as new windows). It was unbelievably pointless.

The interiors guy was due to quote for all the 'bits' such as light fittings, kitchen cupboards etc etc. Part of his initial attraction was a supposed ability to buy quality stuff at exceptional prices.

They were exceptional prices. Exceptionally high. His quote was 200% over budget!

By now, I was tearing out one of the last two hairs on my head.

To add to the budget issues, we weren't doing terribly well with getting permission for the works either.

The downstairs neighbour refused, in effect, to allow an acoustic report (required if we are to lay a wood floor). The managing agents were asking for party wall agreements all over the place - even though nothing we planned could remotely affect anyone. And something called a Schedule of Condition was needed for the common parts.

That was two or three weeks ago. At which point I said enough is enough. And took over.

I brought in the project manager, started to deal with the managing agents myself and even went on to Twitter to find a builder.

This is when it starts to get more enjoyable, less stressful.

Two builders came in on budget. (One of whom I met via a recommendation on Twitter.)

A quick tour of the internet as well as real kitchen showrooms, electrical depots, flooring stores and plumbers merchants confirmed that everything else could be bought on budget (roughly).

And, with a little help from Twitter yet again, the managing agents upped their game and started calling me, answering emails and being helpful. (Basically I moaned about them on the social media platform and within hours they were a very different firm.)

We also made a few quick, pragmatic decisions about the scope of the refurb (basically threw out the old designs), negotiated a deal on a great kitchen and pushed through the License to Alter.

It wasn't that difficult. So why the (insert 4 letter word of your choice) weren't we in this position 4 or 5 weeks ago?

Because this is the world of  agents, builders, solicitors, consultants and designers - a world populated by a seemingly endless supply of the lazy, the slow, the expensive and the useless.

Fortunately there are also a few who are hardworking, good value, talented and conscientious. And hopefully we have now found some of them.

I'll let you know in about 8 weeks time!