Is there any hope?

[Imogen]

Hi all! ?

 

1st post here so please be gentle.

 

I have got myself into a nightmare with a renovation and am hoping for some financial advice on how to get out. 

 

If anyone can suggest any Scottish brokers with the right expertise that'd be great.

 

I bought a large listed building in 2017 for £80,000 in cash, which needed dry rot repairs. The home report value AFTER repairs was given as £230,000. With full renovation end value high 200s.

 

I had a survey from listed building expert which erroneously indicated the dry rot was confined to one side. I bought the house outright and spent circa £30k on a new roof and on urgent structural repairs (collapsing chimneys etc). Plus other urgent work making £120k total.

 

Soon emerged dry rot spread was EXTENSIVE (roof also needed full replacement not patch repair). Builders literally laughed at the survey. I was in over my head & renovating without a mortgage wouldn't work.

 

August 2019 I had a dry rot contractor determine spread and repair costs. They quoted just under £100k plus VAT to replace virtually all the timbers - floors, ceilings, walls, stairs and windows. Time frame given is 3-4 months then  I'd need to reinstate the heating, electrics and bathrooms.

 

Need to find £140-160k finance.  As I have now spent all my savings getting the building dry. I have no deposit. The only security I have is the building!  Full time employment (teacher) earning £41k gross.

 

Is there ANYTHING I can do to get the dry rot works started and get out of this mess? Is there anyone professional I can approach?  I tried Buildstore but got no response, which doesn't bode well.

 

 

 

Edited July 17, 2020 by Imogen

[Mr Punter]

You need to look at every option and rule nothing out.

 

Get some more quotes for the dry rot.  Bear in mind that costs for this sort of work can spiral as more stuff becomes apparent.

 

Can you sell the building as is?  What price?

 

Can you borrow from friends / family?

 

If you do get to do the place up, could you rent out rooms to help pay back the loan?

 

Bear in mind that your house is still probably in better nick than @scottishjohn's and I reckon you are a fair bit younger than him!

 

Good luck!

[Roundtuit]

It won't be an easy or quick route, but any chance of a claim against the surveyor?

[Temp]

Check if your house insurance includes legal protection? These days it's usually a cost option but i guess some places may include it. It's not guaranteed they will fund a case against the surveyor but worth checking.

 

So let's say it would be worth £280k finished. If you need to borrow £150k that's a 53% LTV which sounds possible. Main issue might be the earnings multiple/affordability.

 

Are you living in it? If not has it been empty and for how long? If long enough you can avoid some VAT.

[Temp]

Google found there might be grants available but they are mainly for conservation quality repairs?

 

https://www.mygov.scot/funding-listed-buildings/

https://www.historicenvironment.scot/grants-and-funding/our-grants/

https://www.historicenvironment.scot/grants-and-funding/our-grants/historic-environment-repair-grant/

 

..and it looks like you need to be an organisation.

Edited July 17, 2020 by Temp

[ToughButterCup]

2 hours ago, Imogen said:

....

Is there ANYTHING I can do to 

...

Yes.

Be persistent. Determinedly persistent.  As above, rule nothing out.

Who can you talk to?

Network, with the emphasis on work. Someone somewhere at sometime has faced a challenge similar to yours. Find that person.

 

Make your own luck.

 

 

[Imogen]

Thank you so much for the replies. I can't  really put into wordshow grateful I am, even if there's not much anyone can do.

 

Selling is out of the question. The house was on the market for years before I bought it at a knock down rate. From local knowledge, nobody will touch it in this state. Most builders correctly guessed essential repairs would be £100k plus. Shame the surveyor didn't!

 

I live in a rural area where GOOD tradesmen are thin on the ground. Those with listed building expertise are like hen's teeth. I have had the council's conservation officer and building chief out to visit and advise. The dry rot firm (national company) who quoted are in the words of the building chief "the only firm he would let near a listed building restoration of this scale". He recommended them personally (council's main contractor) and strongly advised me against letting any local firms have a go as they would be out of their depth. They're also the only firm in the county able to provide a proper insurance backed guaranted.

 

I've already approached Historic Scotland sadly. They don't offer grants to home owners in my situation anymore.

 

Property is not insurable as it is. I did try to insure it as soon as I purchased but was advised it wasn't insurable because the roof was actively letting water in and that I would need renovation insurance. So I prioritised replacing the roof in order to get insurance then rang several firms but was advised they couldn't insure as in fixing the roof, the renovation had already started!

 

Unfortunately yes, am stuck living in it. One room plus a basic kitchen. Can't remain here much longer now due to deteriorating condition internally (staircase now precarious). Has also made me very ill two winters in a row.

 

Without being able to finance at least the £120k I need for the dry rot works, I don't have any options. Family don't have cash to lend.

[Imogen]

1 hour ago, Roundtuit said:

It won't be an easy or quick route, but any chance of a claim against the surveyor?

The dry rot firm advised me that I should strong consider sueing the building surveyor as the spread should've been obvious (e.g. stairs were crumbling on the day I took the keys bit survey missed it) but I showed the report to a good friend who is a contract solicitor not long after I bought the house in 2017 and she said there's a lot of caveats/disclaimers in it to protect him from future claims. She thought chances of success were slim.

 

My mistake was asking a building surveyor to assess the works needed on the property rather than going straight to a dry rot firm.

[Cpd]

I live on the west coast of Argyll and over the last 7 years have sunk all my savings into my project and now the project grinds on very slowly as and  when funds are available, any sort of end game is years and years away...... the only positive thing about squandering a small fortune on the place is it’s my forever home and hopefully my children will take it on one day..... If I was to sell tommorow I would loose so very much ......  your position sounds pretty precarious and your going to need to do some serious costings before putting any more money into the project so that you have a clear understanding of how much it’s going to cost to get it into a liveable condition or sellable condition if that’s the end game. Once you have these costs you may decide to cut your losses and sell it at a huge loss or get it livable and then put money into it as and when you can or borrow some seious cash. My experience is with old buildings and renovation and its all costsed me so very much more than expected.... and will continue to absorb all my spare cash for years to come..... but I love it and the life I have chosen and treat the whole thing as a hobby..... an expensive one. 

[Reiver]

2 hours ago, Imogen said:

but I showed the report to a good friend who is a contract solicitor not long after I bought the house in 2017 and she said there's a lot of caveats/disclaimers in it to protect him from future claims. She thought chances of success were slim.

My mistake was asking a building surveyor to assess the works needed on the property rather than going straight to a dry rot firm.

Now I'm no expert, but have a few professional friends.... Caveats are all very well, but if they run against common law then they may not be valid: at some point if someone is putting themselves forward as a professional then surely they have to take at least some responsibility? Was the surveyor a RICS member? If so it might be worth contacting the RICS to see what they suggest. Hope you get something sorted!!

[Ferdinand]

 

Welcome @Imogen - what an interesting person to take this on ?. 

 

For your questions:

 

If you want a mortgage, and I don't see why you shouldn't get one ... there is equity in the house and your job is well-paid and as secure as it gets, I think you may need to talk to either a Building Society or similar that gives autonomy to the local management, or to a specialist broker. You could perhaps expect to pay £500-600 as a fee on top, but they should have sight of the whole market. One suggestion I would make it to look at the 60% LTV point, which is where you will get a better interest rate. For a broker, perhaps try asking the Scottish HHA https://www.scotlandsheritage.org.uk/partners/historic-houses-association/, or asking on a property forum (I am a member at propertytribes.com - though this is more developer /  landlord they have brokers as site sponsors etc and are reputable). For a mortgage you need cooking, looing and bathing facilities, and probably heating.

 

There are things you can perhaps do to start dry rot treatment - such as dismantling all the floors. You could also perhaps phase it if you can quarantine an area that you do not need for a few years to help with budget and do it later - but you know best about that. One possibility is if some work is not needed - is there a need to replace *all* the windows? Can some be refurbished?

 

Aside :Can you get a reduced VAT rate for repairs to a listed building?

 

As everyone else has, I'll give a view to try and help you reflect.

 

When I was 10 my parents took on a listed building that had been empty for several years (5000 sqft small manor on 7 acres) at the age of 40 both, and that had some dry rot and woodworm. The difference was that dad was an architect and had the skills / knowledge to DIY most of it, and how to find people for the rest. One learning point is that projects can take a long time, and if you can find a way to live with it that can work. We had buckets to catch water during rain for three or four years, as the roof had last been maintained by the Victorians and there were no fewer than seven separate gables (one of which fell off whilst mum was sunbathing one day in 1976) - so it took time. They were still doing things three decades later.

 

I think your choice comes down to desired lifestyle, whether this is the project to deliver it, and whether you want to pay the price in terms of time and work, or if pulling out and perhaps trying again later is a better option?

 

One thing to consider is your assessment of what will happen to the market / value for this house after COVID. Are the SG going to clobber it to recover money spent etc?

 

To pull out you would probably need to take it to auction, so I would at least get an evaluation so that you are well informed. The advantage of an auction is that you can give limited information and let buyers explore the dry rot issue. My guestimate is that they will tell you an expected sale price of between 80k and 140k with potential for "fall in love" value on top, based on finished price - estimated money to spend.

 

It is important to think about sunk costs (which you will not recover) and base any decision on the future not wounds from the past. The size of any sunk costs when you are deciding is a distraction.

 

To my eye you may get away with enough to buy another house to lick your wounds for a period, and a small mortgage.

 

I've been listening to Kenny Rogers writing this reply. In a lot of situations he lists the options surprisingly well. I hope you'll forgive 3 minutes of corned beef.

 

 

In your situation I think I would be inclined eat the loss, fold, and walkaway if an exit is available which leaves you on your feet - is the phrase "bloody but unbowed"? We occasionally have people come along who take a long look at projects then take a decision to spend their 5 years doing something else. That is a real option.

 

in my thinking the clincher is that the options are to plough through a high risk path for a number of years to perhaps (assuming no more black holes) emerge with a breakeven value vs money spent and a 150k mortgage, or to withdraw to a less risky option with perhaps a smaller mortgage and come back later if you wish.

 

In financial terms to me the lower risk option is *probably* to cut your losses.

 

Do you love this house and this *potential* lifestyle to go through this and face those risks? Or not?

 

If you decide to keep it then clearly there are options like renting out to 2 lodgers to bring in say £700 a month and so on, and different questions come into view that we can help with here.

 

All the best.

Ferdinand

 

Edited July 17, 2020 by Ferdinand

[Temp]

6 hours ago, Ferdinand said:

Aside :Can you get a reduced VAT rate for repairs to a listed building?

 

Not since 2012 (unless it's a church?)

 

[MortarThePoint]

Some good replies already. I'd reiterate the point of whether you'll enjoy the journey of renovation or not. It's a viable choice to choose to spend more than it's worth on paper if it provides you with a hobby you enjoy. If you see it as being trapped in a nightmare then that's the opposite.

 

Are you currently essentially debt free?

 

It's easy to focus on how much you've already sunk in to it but try to focus on what's ahead. If you can genuinely get a return on the future investment then it is a reasonable idea. Alternatively, if you can cut your losses then that could be the right decision.

 

It's difficult to know from a forum if this is one of the low points on a bumpy but fruitful journey or if this is the gradual realisation of a large mistake. I'm feeling the latter.

 

You may have done so already, but play out some 'what if' scenarios and honestly (to yourself) research them. What if you just walked away, what if there were more unforseen costs, etc.

 

If you're feeling trapped in a nightmare try to keep your spirits up. Happiness lies ahead you just need to plot your path through these troubled waters.

[Cpd]

7 hours ago, Ferdinand said:

assuming no more black holes

I have lived to regret this sentence on a few occasions in  my life ......... 

 

i now preach 

 

“assume nothing “

 

cpd. 
 

 

 

 

Edited July 18, 2020 by Cpd

[Ferdinand]

4 hours ago, Temp said:

 

Not since 2012 (unless it's a church?)

 

 

Except via VAT exempt suppliers, of course.

[Imogen]

11 hours ago, Ferdinand said:

 

Welcome @Imogen - what an interesting person to take this on ?. 

 

For your questions:

 

If you want a mortgage, and I don't see why you shouldn't get one ... there is equity in the house and your job is well-paid and as secure as it gets, I think you may need to talk to either a Building Society or similar that gives autonomy to the local management, or to a specialist broker. You could perhaps expect to pay £500-600 as a fee on top, but they should have sight of the whole market. One suggestion I would make it to look at the 60% LTV point, which is where you will get a better interest rate. For a broker, perhaps try asking the Scottish HHA https://www.scotlandsheritage.org.uk/partners/historic-houses-association/, or asking on a property forum (I am a member at propertytribes.com - though this is more developer /  landlord they have brokers as site sponsors etc and are reputable). For a mortgage you need cooking, looing and bathing facilities, and probably heating.

 

There are things you can perhaps do to start dry rot treatment - such as dismantling all the floors. You could also perhaps phase it if you can quarantine an area that you do not need for a few years to help with budget and do it later - but you know best about that. One possibility is if some work is not needed - is there a need to replace *all* the windows? Can some be refurbished?

 

Aside :Can you get a reduced VAT rate for repairs to a listed building?

 

 

All the best.

Ferdinand

 

Thabk you so much. Your post has been so helpful Ferdinand.

 

I am afraid I was the idiot who fell in love and bought the house! It had already gone to auction twice at £120k and not sold.  I then offered £80k and they took it to auction a third time to try to get a better deal.  Needless to say nobody else was smitten with the decrepit ruin so it was mine.

 

I didn't buy the house to make money and had never intended to sell it. I wanted to be its custodian (previous family had done no modernisation in about 70 years). Even derelict, it was my dream home and I was prepared to live through a decade of hardship to achieve it. I have done three Scottish winters with no heating. I was planning to die in this house - though perhaps not throught death by collapsing staircases or chunks of lath plaster ceilings ?

[Imogen]

3 hours ago, MortarThePoint said:

Some good replies already. I'd reiterate the point of whether you'll enjoy the journey of renovation or not. It's a viable choice to choose to spend more than it's worth on paper if it provides you with a hobby you enjoy. If you see it as being trapped in a nightmare then that's the opposite.

 

Are you currently essentially debt free?

 

It's easy to focus on how much you've already sunk in to it but try to focus on what's ahead. If you can genuinely get a return on the future investment then it is a reasonable idea. Alternatively, if you can cut your losses then that could be the right decision.

 

It's difficult to know from a forum if this is one of the low points on a bumpy but fruitful journey or if this is the gradual realisation of a large mistake. I'm feeling the latter.

 

You may have done so already, but play out some 'what if' scenarios and honestly (to yourself) research them. What if you just walked away, what if there were more unforseen costs, etc.

 

If you're feeling trapped in a nightmare try to keep your spirits up. Happiness lies ahead you just need to plot your path through these troubled waters.

 

Thank you for your words of encouragement.

 

I was very down/hopeless yesterday which probably came across in my post. The "nightmare" is being stuck unable to move forwards and repair the house.

 

If I can find a way to fix the dry rot, my choice would be to stay every time. Not interested in making money from the house, I didn't buy it with that in mind. I wanted a home to live in for the next 50 years.

 

I do have one debt. A low interest (2%) personal loan with my bank (£215 pm) which was for a car (I travel 50 miles a day for work so essential). Have run affordability calculators for several mortgage providers and they still come out ok.

 

I was just debating whether in terms of securing a renovation mortgage, should I be paying that loan off over the next 18 months or attempting to save a deposit?

[Ferdinand]

15 minutes ago, Imogen said:

 

Thank you for your words of encouragement.

 

I was very down/hopeless yesterday which probably came across in my post. The "nightmare" is being stuck unable to move forwards and repair the house.

 

If I can find a way to fix the dry rot, my choice would be to stay every time. Not interested in making money from the house, I didn't buy it with that in mind. I wanted a home to live in for the next 50 years.

 

I do have one debt. A low interest (2%) personal loan with my bank (£215 pm) which was for a car (I travel 50 miles a day for work so essential). Have run affordability calculators for several mortgage providers and they still come out ok.

 

I was just debating whether in terms of securing a renovation mortgage, should I be paying that loan off over the next 18 months or attempting to save a deposit?

 

Isn't this "deposit" a total Red Herring in this discussion?

 

Your "deposit" is eg the other 40% when you take out a 60% mortgage, n'est-ce-pas? And you don't need cash to buy that because you already have it.

 

The advantage of that loan is that it provides by shuffle more working capital. Depends how much headroom you need combined with how the costs compare to any mortgage. Essentially it provides water under the boat to stop you grounding - the question is whether a) you need the water, and b) there is a better way of providing it.

Edited July 18, 2020 by Ferdinand

[Imogen]

11 hours ago, Ferdinand said:

For a mortgage you need cooking, looing and bathing facilities, and probably heating.

Have I got this wrong Ferdinand?

I had assumed that because of the serious structural issues caused by the dry rot (e.g rooms where 50% of the floor has been removed and internal walls/ceilings taken down) that no normal bank would offer a mortgage.

 

The house does have two basic bathrooms (1st floor one inaccessible due to the collapsing staircase but fully plumbed in). Ground floor bathroom is still accessible (although hallway leading to it is severely affected and perilous). It has an electric shower which is working and a working loo.

 

I did spend some money on heating. I have installed an 8kw multifuel stove in the room I live in.

 

I have also partially installed a central heating system. There is an oil fired Rayburn cooker (purchased 2nd hand by me) which provides cooking facilities and powers a brand new hot water tank and several radiators which are installed on one side of the house. The plan had been to install rads to the other side once dry rot treated but we then discovered the spread was extensive and covered the entire house. The heating system currently switched off due to the condition of the building. I think this will all have to be ripped out when the rot is treated, though I will ne able to reuse most of it.

 

 

 

[Ferdinand]

Just now, Imogen said:

Have I got this wrong Ferdinand?

I had assumed that because of the serious structural issues caused by the dry rot (e.g rooms where 50% of the floor has been removed and internal walls/ceilings taken down) that no normal bank would offer a mortgage.

 

The house does have two basic bathrooms (1st floor one inaccessible due to the collapsing staircase but fully plumbed in). Ground floor bathroom is still accessible (although hallway leading to it is severely affected and perilous). It has an electric shower which is working and a working loo.

 

I did spend some money on heating. I have installed an 8kw multifuel stove in the room I live in.

 

I have also partially installed a central heating system. There is an oil fired Rayburn cooker (purchased 2nd hand by me) which provides cooking facilities and powers a brand new hot water tank and several radiators which are installed on one side of the house. The plan had been to install rads to the other side once dry rot treated but we then discovered the spread was extensive and covered the entire house. The heating system currently switched off due to the condition of the building. I think this will all have to be ripped out when the rot is treated, though I will ne able to reuse most of it.

 

 

 

 

You need to ask them. The ones I listed above come under the "habitable" requirement.

 

I am going on what is required before finance for BTL renovations becomes more difficult.

 

Extensive dry rot may be a further cause to make it unmortgagable - but I have never done one of those. This may be a useful thread over on propertytribes - this mentions Dry Rot but the commentator implies 'usually' which would put you into specialists or special arrangements eg phased release as value increases.

https://www.propertytribes.com/11-scenarios-that-make-a-property-unmortgageable-t-9544.html

 

F 

[Imogen]

1st pic is door to the bathroom. You can see the rot is literally knocking on the door.

I am going for the "open plan" look, as you can see ???

[NSS]

Welcome @Imogen 

 

Some good advice and ideas already given, but when you say it's a "large" house, just how big is it (square feet/square metres)? And what level of "listing" does it have?

 

Also, is it two-storey or three? Is there a basement? Is any of it on a single level and, if so, how much of it and what rooms are in the single-storey section? 

[Jilly]

Gosh, you poor thing, that must be so hard for you. I know what it is to have a love affair with an old house.

Random musings:

Have you thought about crowd funding? A couple raised cash on Grand Designs by this method. You might appeal to people who love old buildings. 

What will you get for your £100k from the dry rot co? Will they replace all the timber and make the house good as new with a guarantee?

Could you find a hardy lodger who might be willing give you a few hours work a week in return for a roof over their head?

Good luck xx

[Imogen]

4 hours ago, NSS said:

Welcome @Imogen 

 

Some good advice and ideas already given, but when you say it's a "large" house, just how big is it (square feet/square metres)? And what level of "listing" does it have?

 

Also, is it two-storey or three? Is there a basement? Is any of it on a single level and, if so, how much of it and what rooms are in the single-storey section? 

It's 194m2 internal, 258 external excluding outbuilding.

 

Built late 1700s. I have sassins (sp?) from 1795 so some time before that.  Grade B listed (Scottish equivalent of English II*) but head conservation officer said she thought it she be a 'C' (grade II) really and that the dry rot works would be considered a repair rather than alteration as the timbers are being reinstated exactly as is.

 

Property is 2 storey but with one room in the attic.

 

There's also a single storey  stone outbuilding (stable?) attached which is the size of a small cottage. I had intended to convert it at a later date.

Edited July 18, 2020 by Imogen

[Imogen]

2 hours ago, Jilly said:

Gosh, you poor thing, that must be so hard for you. I know what it is to have a love affair with an old house.

Random musings:

Have you thought about crowd funding? A couple raised cash on Grand Designs by this method. You might appeal to people who love old buildings. 

What will you get for your £100k from the dry rot co? Will they replace all the timber and make the house good as new with a guarantee?

Could you find a hardy lodger who might be willing give you a few hours work a week in return for a roof over their head?

Good luck xx

Hello ?

 

No chance of lodger until it's finished. I only have one room that's "safe-ish" to live in and access is via a severely decayed staircase.

 

The dry rot quote followed a day of exposure works so they have a good idea of what's needed. The quote includes a plan diagram.

 

They are taking out almost all of the floors, internal walls, ceilings and about 70% of the windows. Then strip all plasterwork and treat stonework. New concrete screed and floating floor to downstairs rear elevation. Upstairs needs new joists/floorboards on most of the 1st and 2nd floor (attic). Replace almost all the ceilings and internal walls (finished with plaster skim). Replace listed Georgian staircase (will need to be custom made due to size & unusual proportions). Replace rotten lintels and original door frames then treat and rehang doors. Replace original sash windows (8 of these, 5ft high, 4ft wide) and the original shutters and original panelling on each one. Oh and install couple of large RSJs to replace rotten timber beams. 

 

Biggest costs are the joinery jobs -custom staircase and the windows/window shutters/panelling. The house is listed because the joinery is all original so IMO it's essential it goes back as it is.

 

This will all be done with treated timber and have a 25yr insurance backed guarantee from a PCA firm.

 

There is a possibility that two more windows will need replacing depending on inspection. They said allow 3% contingency.

 

 

Edited July 18, 2020 by Imogen