Folly

The locksmith handed over a shiny new set of keys after changing the locks. His smarmy Essex wideboy grin faltered as he noticed the neighbourhood parking warden slap an infringement notice on the windshield of his truck. His extortionate call-out fee, “inflation innit”, suddenly looked less lucrative.

He charged down the street in pursuit of the warden, unleashing a torrent of abuse and vitriol. She stood barely five feet tall, and was built like a jockey. Neither the stab vest nor body camera that she wore provided any form of deterrent to the irate locksmith.    

The warden turned to face the oncoming threat with a world-weary sigh. In heavily accented English she recited what was clearly an oft-repeated speech. She was just doing her job. Didn’t want any trouble. Earned barely minimum wage. Had young children at home.

The locksmith didn’t even pause. Stampeding towards her like a hungry rugby prop forward descending on a hotel breakfast buffet. Radiating menace. Screaming threats of rape, retribution, and revenge.

The parking warden didn’t flinch. In the blink of an eye, the locksmith found himself winded and sprawled flat on his back on the footpath. Sporting a fresh bruise and a stunned expression, his brain struggled to compute how he had been poleaxed by an unarmed woman less than half his size.

From beneath an ancient Toyota Prius parked across the street, two teenage boys paused their efforts to steal the catalytic converter and gave her a raucous cheer. She bowed her head in acknowledgement, and called out “I grew up with four elder brothers!”

The cheer was taken up by a dishevelled homeless man staggering down the middle of the road. A urine stain spreading across the crotch of his ill-fitting tracksuit pants. Possibly from the excitement. Possibly from the heroin in which he had invested the proceeds of his afternoon’s panhandling. His eloquent pitch of raising funds to secure “a shower, warm bed, and hot meal at the shelter” provided a more palatable fiction than the simple truth of wanting a brief escape from a tough life. At least while he was stoned he wasn’t noting down and selling the PIN numbers of those withdrawing money from the local supermarket’s cash machine!

Behind me, a surly labourer hauled the last of the construction tools out to a van. Gaunt and sweaty, he looked about ready to collapse. His diet appeared to consist solely of heavily caffeinated energy drinks to get him through the day, followed by multiple cans of Stella on the way home to help him sleep.

The labourer had endured another long day. Waking at 3am in the group house dormitory bedroom he shared with three other itinerant labourers. Out the door before 4am, to catch the bus for the two-hour journey into London. Hoping there would be work, the uncertainty of a zero hour contract.

Today he was fortunate, required for the whole day. By the time he finished up and caught the bus back home, it would be past 8pm. After expenses, he might have earned £50 for his day’s labour.

The builder followed the labourer out the door. He extended a handshake to me, marking the end of our construction project. Then he admonished that the close on the defect snagging window started now.

I thanked him for his efforts. It had been a lively and entertaining relationship, fraught at times. Credit where it is due, he was good at his job and had done what he said he would do. My experience with the construction industry is both those traits are rare enough to be considered superpowers.

Indoors, every surface was covered in a fine layer of plaster dust. Windows bore the remnants of painter’s masking tape. Bathrooms resembled nightclub toilets after a huge Saturday night. My failing to negotiate an after-build clean into the contract was an oversight I was already beginning to regret.

Looking around I felt a strange combination and relief and melancholy. Relief that it was nearly over. I can see how some people thrive on renovation projects. The opportunity to express their creativity and design skills through paint, plaster, and floorplan. I can also see how more than a few Grand Designs are said to result in Grand Divorces.

This “three-month build” project had taken more than twelve months.

Four months conveyancing to acquire the property. The English property title system is a mess. Expensive. Glacial. Uncertain.

Another three months seeking planning approval for renovations.

Followed by three more months of battling objections from the neighbours.

Too much noise. Too much dust. Too much disruption.

One neighbour feared their own unapproved extension would be rumbled by the council.

A second neighbour protested that their view, light, and privacy would be compromised. Three intangible things, governed by opaque and subjective rules that are expensive to enforce.

You don’t own your view.

You may own access to light, but only after having enjoyed it for more than 20 years.

Privacy? Good luck with that! In an age when we unthinkingly fill our “smart” homes with Internet-of-Things devices containing all manner of streaming cameras and hot microphones. “Alexa…”. “Hey Google…”. “Siri…”. The premise behind the plots of Lupin and Luther are scary because they are plausible.

A third neighbour objects on principle to all planning requests, because any change would alter the “character” of the neighbourhood. Celebrating the old simply because it was old, not because it was good. And good this property most certainly was not!

Formerly owned by a slum landlord operating an unlicensed flophouse for almost half a century.

Faulty wiring. Faulty plumbing. Faulty everything. Held together by little more than duct tape and hope.

Eventually, the build commenced. The contract carefully negotiated in my favour.

Fixed price, so the builder ate the effects of inflation, which was compounding at 10%+ a year.

Milestone payments in arrears. If the builder went bust or walked off site, I wasn’t left out of pocket.

Penalty clauses for delivering work that was late, shoddy, or over budget.

In the beginning, all those clauses seemed prudent: if someone had to lose out, it wasn’t going to be me!

In hindsight, they drove poor behaviours. Encouraging the builder to use cheaper materials and less skilled labour to deliver the project on time and budget as input costs soared.

Fine for the builder, who rolls off the job upon completion. Sucks for those left to live with the consequences, namely me.

But deliver he had! After just over a year, it was done. The seemingly endless time, money, and attention vortex which had consumed almost all my nights and weekends was suddenly gone.

The project had cost a fortune and aged me by a decade.

I had never appreciated just how many decisions go into building a house. Every single hinge, handle, tile, and towel rail includes multiple decisions. Colour. Quantity. Shape. Size. Style. Placement.

Decisions that have an arcane sequence of dependencies.

For example, power sockets get installed near the end of the build, after plastering and painting are complete. Yet the wiring for those sockets needs to be installed near the beginning of the build, before the walls are closed up. Locations of the sockets are decided upon based on insight and imagination, as the walls in which they will reside may not yet physically exist at the point the decision is required.

Mistakes are costly. The later they are discovered, the higher the price of putting things right. Reopen walls. Lift tiles. Jackhammer cement. Change or indecision quickly ceases to be viable.

Clever home design software certainly helps with that imagining, but only to a point.

Hundreds, possibly thousands, of decisions in total. As relentless as it is exhausting.

Particularly when I don’t have strong feelings about the shade of chrome or the style of filial. It turns out I don’t really care.

To me, home is wherever I happen to be living.

Homes are filled with stuff. All of which I could happily walk away from and never think about again.

A perspective formed as a young backpacker, carrying all that I owned on my back. It was liberating.

A perspective reinforced by multiple international moves. Almost everything becomes disposable when the alternative is paying for it to be shipped and stored.

Is it worth shipping cheap flatpack furniture and discount store cookware halfway around the world?

Was stuff worth insuring? If not, would I even bother replacing it, were it to be damaged or lost?

The default answer to all the above was probably not. Stuff is useful. Practical. But not sentimental.

Some decisions can be delegated. Some can be outsourced. But unlike an investment property, for this project ultimately I would be the one who has to live with the consequences of those decisions. A vested interest. Skin in the game.

A year ago, I had explored the mean streets of a faded Northern city, one hundred years past its prime. A range of tired four bedroom detached family homes could be purchased for comfortably less than £200,000. List price for the new build equivalent, including developer premium, was £250,000.

I thought about that for a moment. House and land for £200,000 all in. Slightly more than six times median household disposable income, although few in that location would be earning the median.

A quick search revealed land values in the area ranged between £75,000 and £100,000. Which meant the building was worth roughly £100,000.

£100,000 for a fully loaded house. Bathrooms. Flooring. Kitchen. Windows.

Those houses might have been located in a town that opportunity forgot, but each one was kitted out in essentially the same manner as any other dwelling in the country: four walls and a roof.

Same bathtub. Same boiler. Same flooring. Same oven. Same radiators.

All imported from the same overseas suppliers. Arriving on the same ships. Sold through the same stores. Delivered on the same trucks. Driven by the same workers, earning the same low minimum wage.

Somewhat surprised, I double-checked my logic by choosing another disadvantaged area, this time in Cornwall. House and land prices were slightly higher, but the building component cost remained about the same.

Which got me wondering. If a house could be built for £100,000 virtually anywhere in the country, why had my renovation project on a similarly sized existing building cost more than double that amount?

Had I been thoroughly and convincingly ripped off? Perhaps.

Or was the local builder simply charging the London tax? Possibly.

There is a line of argument that says London wages are higher than those in the rest of the country. Which may be true, for select skilled professions, where self-harming Brexit-induced anti-migration sentiments have exacerbated a pre-existing labour shortage. However, it was unlikely to account for the full difference. Particularly when the labourers, delivery drivers, and parking wardens were struggling to survive on the same minimum wage as those residing in the rest of the country.

Most likely, a combination of the two.

Not liking that answer, I tried another angle. Would my development project have created more value than it had cost?

At the time it commenced, that had been a break-even prospect at best. Made possible via a combination of the purchase price fairly reflecting the original condition, and a fixed price build delivered to a tightly controlled budget.

Alas, property prices have fallen since the purchase. Market forces combined with rising interest rates and economic own-goals.

While prospective buyers are fewer in number, they are still making offers on properties. Unlike a year ago however, lender computers increasingly say “no” when calculating whether to lend based upon the offer price. Too high a loan-to-value ratio. Too much risk.

Were I to sell today, I should recoup my original purchase price. The renovation costs are another story. Likely written off as a charitable donation to the next buyer. In time I may be saved by a rising market, just like on an episode of one of those amateur property developer television programmes.

This project was the second most foolish financial decision I have made. Folly in its most literal sense.

Stamp duty costs had instantly immolated several years’ worth of net earnings. A wealth tax by another name. Table stakes for owning property in a neighbourhood that is ok, but nobody’s dream location. Price is determined by location. Proximity to places more desirable, and transport links to help get there.

Productive cash-flowing investments were surrendered to procure it. Exchanged for trapped equity in a dwelling with zero income-earning potential while I occupy it.

There is a spurious ego-salving argument for imputed rent. Servicing the long-term fixed-rate mortgage costs, fortuitously obtained just before interest rates started to rise, costs less than a quarter of the prevailing market rents.

However, the truth is that neither imputed rent nor owner equity can buy groceries or pay utility bills.

Investments with capital growth potential were liquidated. Replaced by a single-family home with dubious growth prospects over the medium term. If inflation is running at 10%, and house prices aren’t growing by at least that much, then in purchasing power terms home values are falling. A situation unlikely to last forever, but opportunity cost has a long-tail when it comes to underperforming assets and compounding.

At this point, I could roll out all the time-honoured self-justifying property ownership clichés.

“Homes are assets, but definitely not investments”.

“Homes are always emotive purchases, but rarely intelligent ones”.

“Homes are one of most tax-advantaged vehicles for inter-generational wealth creation and transfer”.

All of which are true, and would form the stock ending to many a property purchase story. Code for the buying choices failing to honour sound decision-making principles nor pass evidence-based financial tests.  “It made little sense, but I did it anyway”.

The same line of faulty reasoning used by addicts, narcissists, sheeple, and poor decision-makers everywhere!

I don’t subscribe to such trite conclusions. The purchase price was disproportionately high. The renovation cost unreasonably large. The financial trade-off outsized for the promise of lifestyle reward.

And yet, in time the house will become a home.

A home that affords no material difference in lifestyle to the rental we previously occupied, beyond a lower recurring cash flow outlay each month.

If I had my time over again, were I to purchase at all, I would have purchased a house somebody else had already done up. Let the previous owner to make all those decisions, overpay for the privilege, then swoop in and buy the finished product from them.

Easier.

Instant gratification.

Far less stress.

That said, I am grateful.

Grateful to have once been in a position financial position where I could indulge such a folly.

Grateful that I was (mostly) able to absorb the financial self-harm it has involved.

Grateful that I had the option, unlike the parking wardens, thieves, labourers, and addicts who share my neighbourhood.

Mostly however, I’m grateful that it is over. I’m exhausted.

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References

• BBC Films (2023), “Luther: The Fallen Sun”, Luther
• Gaumont Television (2021), “Chapter 3“, Lupin

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