Weekend reading: Bedding in

Comments on this entry are closed.

• 1 Survivor February 24, 2018, 4:53 pm

  Memories of 8 months on an old argos airbed exhumed from a cupboard after my last move never fail to make me appreciate my mattress now…..

  The imagination runs riot though Sir: ‘I spent Friday scrapping it out in a Warren Evans store to secure a bed at a whopping discount’ – at images of the Monevator in his current midstage of evolution between frugal & nouveau bourgeoisie. We imagine the woad-painted homeowner decking fellow Londoners out of the way at the forefront of the SALE !!! wave to claim his treasure in the form of a prize mattress.

  Yessir, as a newly ordained FI, you now cannot put a price on beauty sleep 🙂
• 2 hosimpson February 24, 2018, 5:06 pm

  I’m hopeful about Gen Z, but I wouldn’t say I’m bullish. We thought the Millennials were going to take the internet and use it to do grand, amazing things. And if not, then at the very least the instant and constant connectivity was going to do away with the barriers of class, culture, race, gender… The Millennials took the internet and gave us instagram models.
• 3 Ms ZiYou February 24, 2018, 7:42 pm

  And it’s Saturday….

  So diamonds are going out of fashion and depreciating? Are we finally getting concerned about blood diamonds, or have we finally realised it’s a myth De Beers created? And art seems quite low, I guess we only hear about the extremes that were bought as unknowns and then appreciate massively. Overall the graphic comforts me as I’m mostly in stocks, nothing like a bit of confirmation bias.

  Interesting Stelios is getting into banking, hadn’t seen that….but would I actually trust him with my cash? I’d be so paranoid I would actually read all the terms and conditions. Twice. I suppose he is at least less abrasive than the Irish one.

  I think it’s a great reminder to us all that we change and evolve as we age, that someone who preached lyrically against home ownership for years, now has published his second post in a week on home furnishings! I am only joking, but it’s a good point to note that we can all make changes, not matter how fixed our beliefs were in the past.
• 4 Neverland February 24, 2018, 11:32 pm

  Props to the FT for calling it like it is

  “There is nothing necessarily savvy about merely having, rather than acquiring, wealth….The people who seem good at saving, on the other hand, are actually also normal at saving, but very good at receiving.”
• 5 Brod February 25, 2018, 8:43 am

  I remember discussing buying a Warren Evans bed and memory foam mattress a decade ago. We agreed as we spend a third of put lives using it, it would be money well spent. A decade later, still accruing the benefits in good night sleeps, comfy Sunday morning lie ins and a better supported back.

  And home ownership? Well, nice no-one can force you to move with a couple of months notice, no?

  BTW, I think the best way of killing buy to let is giving tenants security of tenure. If they pay the rent on time, they cannot be evicted and rents can only be increased by the lesser of CPI or 5% or something.
• 6 The Investor February 25, 2018, 11:32 am

  @Survivor — That’s too accurate. I explained to the salesman I was arbitraging my temporal flexibility to buy a bed trading below its tangible book value. (Well, almost! 😉 )

  @MsZiYou — I know you were just kidding and I can’t blame anyone for not following the exact ups and downs on my views on property, but to be clear I’ve never been against home ownership per se, and there are posts on this site explaining why it’s a good idea. I think I’ve mentioned before I’ve a tranche of ex-London friends that until 5-10 years ago were still thanking me for encouraging them to buy in the mid to late 1990s, after showing them the maths. What I’ve been against is (a) that’s it’s the only way and (b) London property, which as best I can tell has been overvalued since at least 2003, but where you have to say that after 15 years perhaps it wasn’t. (Of course I think it is *now*. 😉 )
• 7 Neverland February 25, 2018, 11:34 am

  @Brod

  You could also just turn all assured shorthold tenancies into regulated tenancies, repleat with right to buy discounts

  The Daily Telegraph’s personal finance issue would be quite funny on that day
• 8 arty February 25, 2018, 12:44 pm

  @Neverland
  You could do that, then sit back and watch all those properties that are on the rental market because, say, the owner is away for a few years, suddenly empty. Not sure how that would help renters (or owners, or anyone else).
• 9 TT February 25, 2018, 12:56 pm

  Having read a couple of books by each, I found Pinker a convincing and engaging writer with a compelling story, and attending a talk a few years ago he came across equally well. Taleb I found a bore, and whose popular success mystified me, he sounded like a higher educated Gladwell. Yawn. Maybe the joke is on me, but while I enjoy healthy debate, taking an opportunity to slam another with such an insult doesn’t seem very nice. I’m guessing Taleb eats at McDonalds.
• 10 The Investor February 25, 2018, 2:22 pm

  @TT — Yeah, I like Pinker, too. 🙂 I just thought the quote was vintage Taleb, for good or ill. Plus a notice the new book is out (this week I think.)
• 11 Neverland February 25, 2018, 2:44 pm

  @arty

  I kind of view Corbyn as a lesser of two evils choice but he does actually have a half formed policy to expropriate empty homes

  So that is how I guess Labour plans to help somebody
• 12 Mathmo February 25, 2018, 3:19 pm

  FT Alphaville article very interesting this week. What it fails to observe that inter-generational cash flows have been a fact forever and longer. What’s novel about the millenials is that they appear to be borrowing from the older generation. The older generation borrowed from the future ones to fund their underfunded defined benefit pensions and inflationary policies.

  In many ways the bank of mum and dad is just repaying the loan it took out, not lending against future inheritance.
• 13 Survivor February 25, 2018, 4:26 pm

  @ Neverland – I agree on the crucial need to fix the ever-ignored paucity of homes for ordinary people to actually live in in the UK – I visited S. Africa a few years ago & the rich there live in beautiful places whilst the vast majority mostly live in teeming townships where their kids play in open sewers. To be fair, this is common in the less developed world & becoming increasingly more so, courtesy of the global reach of neoliberalism.

  It’s all very well accepting such inequality as timeless – as you are lectured by apologists benefiting from the status quo, but the winners in their gated communities aren’t really winning either. My friends I went to see, live in fear daily of attack by those who have nothing, so their lies aren’t actually free, they shuttle between the expensively protected zones of their homes, workplaces & entertainments. It felt crazy going to a mock castle complex in Jo’burg as a guest/tourist, to a restuarant & being searched by heavily armed private security going in, even while fully understanding it was for our own protection.

  As most citizens of we-the-developed countries are forced to learn how to be poorer, [like our grandparents were] it’s not hard to see how swathes of the country will become no-go areas due to the seething resentment of those who have no hope. Scary inner-city areas even the police are not comfortable in have been around a long time, but as austerity grinds on & hollows out the middle class, it will feel different as they become the norm.
• 14 Brod February 25, 2018, 10:38 pm

  @Neverland – I’ve always found the DT comments section a weird parallel universe. I’m a frequent reader. “My name’s Brod and I read the DT comments sections.” Where on Earth do all these people live? Well, maybe in that parallel universe, not on Earth.

  @arty What proportion of rented properties are “because, say, the owner is away for a few years”? Really?
• 15 The Borderer February 26, 2018, 12:55 am

  @Mathmo – “In many ways the bank of mum and dad is just repaying the loan it took out, not lending against future inheritance.”

  Unless, of course, they’re SKI’rs!

  https://innovateuk.blog.gov.uk/2016/07/19/spending-the-kids-inheritance-what-it-means-for-uk-companies/
• 16 Marked February 26, 2018, 10:04 am

  Hi TI,

  Well done on finally putting feet in the Jones’ camp 🙂

  Sorry to add a link but knowing the ethos you evangelise so greatly, you probably missed this as it came in on the Friday, I think – potentially when you were knee deep in sugar soap or something. Buffett’s bet with the hedge funds ended and he is giving their wager to a Girl’s charity in Omaha.

  http://money.cnn.com/2018/02/24/investing/warren-buffett-annual-letter-hedge-fund-bet/index.html

  Am looking forward to you or your alter ego’s (#TA) commentary on this 🙂

  Good luck with all the fun stuff. Have you enrolled in a college course on how to wallpaper yet? Of course you’ve not given away if this is new build or leafy suburb character property. The latter taking considerable more effort to get the surfaces prepared once you scrape off the woodchip paper that is hiding all manner of sins.
• 17 arty February 26, 2018, 10:43 am

  @Brod
  No idea – probably pretty small, but nonetheless, removing a small portion of available properties from the market is surely negative rather than positive isn’t it?
  If there’s an upside that would negate that, it’s not been mentioned here so far.
  (I’m talking only about right to buy at a discount, not improvements to tenancy laws).
  If one’s property can be involuntarily taken, at a massive discount, then obviously everybody in the business of providing property to rent will stop doing so. Yeah, that’s great, prices plummet, first time buyers can get on the ladder, etc, but there always has been, and always will be a need for a rental sector. The upcoming tax changes are likely to bring this sector back down into line with more historically normal levels without the need for expropriating property.
• 18 Neverland February 26, 2018, 12:09 pm

  @arty

  No one is arguing about the need for a rental sector for housing in the UK. The only question is around the role of the state in regulating and providing rental housing. Just a personal view but more of the first and more of the second please

  Milliband called it right when he said called the Tories out for being incapable of taking on vested rentier interests in UK society and being incapable of doing anything to improve the UK’s glacial social mobility

  This prevalent idea that only private enterprise can get stuff done is just bs put about by vested interests with no less of an agenda than a Putin troll farm
• 19 dearieme February 26, 2018, 1:16 pm

  ” I think the best way of killing buy to let is giving tenants security of tenure.” Quite right: stealing the landlords’ property rights is pretty much guaranteed to kill BTL. Lloyd Georg’e WWI rent control buggered up the housing market until long after WWII.
• 20 WNeil February 26, 2018, 3:38 pm

  I have BTL as diversification from S&S. I’d have no problem with tenants having security of minimum periods; a happy long-term tenant means a reliable yield, which for me is the purpose of holding BLT. But in my experience it is the tenant’s situations that change and they decide to move on or buy.
• 21 Brod February 26, 2018, 11:49 pm

  @ Arty “removing a small portion of available properties from the market is surely negative rather than positive isn’t it?” It’s not a negative at all. Those properties are then sold. Recycled rather than hoarded with tax perks unavailable to owner-occupiers.

  @ Wneil And of course no landlord ever evicted a tenant. Their circumstances changed and they moved on as they couldn’t afford the rent increases.

  A rental market most definitely has its place. Students, people moving into an area, other non-permanent people. What is should not be is a massively tax-subsidised racket where people with access to capital permanently lock out those with less capital.
• 22 WNeil February 27, 2018, 6:09 am

  @Brod “And of course no landlord ever evicted a tenant. Their circumstances changed and they moved on as they couldn’t afford the rent increases.” Which is why I said I’d have no problem with tenants having security of minimum periods. I would welcome it. No, my tenants have never moved on because of rent increases. They have moved either to relocate for work or after saving the deposit to buy their own place in the same area.
• 23 The Rhino February 27, 2018, 1:24 pm

  Updated the spreadsheet for Feb

  Was steeling myself for a really chunky loss.

  Not too bad as it turned out -2.53%

  Does anyone remember the horrendous headlines in the business sections back in Sep 2017?

  No – because there weren’t any, I was -2.29% down that month.

  Just goes to show – ignore everything, its just noise..
• 24 Marked February 27, 2018, 2:30 pm

  Brod
  Your assertion that the BTL market is a “massively tax-subsidised racket” I can’t quite quantify. Even before the 3% uplift in SDLT and tax on revenue opposed to profits I honestly don’t think it was a boondoggle.

  I was an accidental landlord for 3 years, and honestly it’s a pain in the neck. Also it was my tenants that wanted to move (due to their grown up kids). I also can’t see, for the majority of the country, how as an asset class it beats stocks and shares. It may well do against money in the bank at some silly minimal interest rate but I do believe having the money tied up is a big risk – you can’t compare the two. Yield where I live is lucky to be about 3.5% – not worth doing in my opinion.

  and now, with the tax changes, I don’t think BTL can ever be entertained against other asset classes if you wanted to “add” outside a Ltd company.

  As a sidenote my wife had a BTL for 25 years. It clearly made a lot of capital appreciation (south east) but she paid out considerable sums in Capital Gains tax @ 28%. The asset class is/was getting taxed appropriately beforehand in my opinion.

  I do take the point that some Landlords didn’t hold their responsibilites of tenant care appropriately. Where I had my house there was clearly a cross section of Landlords. However, that’s no dealt with by overtaxing, which as of the next tax year it is.
• 25 The Rhino February 27, 2018, 2:51 pm

  @Marked – The critical thing that made it stellar was the ability for the retail investor to get massively geared up and by doing that such that an enormous interest only mortgage completely offsets any income you paid no tax. If you couple that with enormous capital growth then its a path to riches and thats exactly what we’ve seen over the past 20 years. But you’re right, theres no way to get round the CGT bill at the end as you can’t sell a bit of a house. I also completely agree that its far from passive, its a right old pain as I found out from having a crack at it over several years myself. I ditched it as the yield was terrible, I hadn’t taken on enough debt and I’d effectively missed the golden years of capital growth..
• 26 Brod February 27, 2018, 3:47 pm

  So off the top of my head some tax advantages are mortgage interest relief, property maintenance and the wear and tear allowance of 10% of the rental income (which could be claimed whether or not any wear and tear occurred. And btw old chap, no need for receipts for that one ;-))

  Though the rules have recently changed, none of these were available to owner occupiers.

  I too wouldn’t go anywhere near it. Cos I’m a lazy bugger mainly. And it’s very illiquid.

  And the Credit Suisse (?) report says since 1900 the return to equities is about double that to residential property. We’ve just been living in a period where the tax distortions (in the UK anyway) allied 30 years of continuously falling interest compounded a property bubble.
• 27 The Rhino February 27, 2018, 5:12 pm

  @Brod – its also a massive liability constantly weighing on your shoulders, everyones different but for me the old BTL was a miserable game
• 28 Neverland February 27, 2018, 5:16 pm

  @Rhino

  “theres [sic] no way to get round the CGT bill at the end as you can’t sell a bit of a house [on a BTL]”

  Au contraire mes ami

  I am pretty sure if you move back in to a property you let out, provide you can demonstrate you are not a professional landlord you would benefit from the private residence exemption from CGT.

  I would think this could be done a couple of times without any issues, half a dozen times might be more difficult over a decade might be a bit more difficult to get away with

  The UK tax system is as leaky as a bucket, just ask Google (literally)

  I read an unreliable statistic somewhere that, based on a survey in a London borough, 40% of small landlords don’t even declare their rents in their tax returns
• 29 The Rhino February 27, 2018, 6:00 pm

  @NL yes ok but in the real world where your wife and kids aren’t so keen on moving into that student let for several years to save a few quid then there isn’t a way round it..
• 30 Brod February 27, 2018, 8:17 pm

  @Rhino I agree totally. Which is why I’ve never done it.
• 31 october February 27, 2018, 8:44 pm

  Again, slightly off piste, but interesting to read Buffetts latest comments/warning about a ‘terrible mistake’ for long term investors to measure risk by a portfolio’s ratio of bonds to equities.
  Yikes !
• 32 Marked February 27, 2018, 10:13 pm

  Brod

  I agree that 10% wear and tear was an easy admin that some would make money on. Sadly the house I was an accidental landlord for was a 4 storey Bath stone listed building that often needed work (plumbing and electrics mostly) so I never got to do the 10% wheeze! Fabulous house though (alas wrong school location)

  That credit suisse report I think is very much correct, when you’re looking at such a big time horizon. The last 16 years of falling interest rates (remember in that time horizon money was normally around 5% not the 15% of the early 80’s and 90’s) is just a small anomally. There have been others that are worse. I was lucky enough with the house above to get all the old mortgage deeds from the 1870’s onwards, and the house was sold 3 times in the 1920’s before the crash. It tripled in value in 7 years. It’s the same old same old – focus on a small time horizon and you will see stupidly abnormal peaks or troughs (Internet 1990’s ; BitCoin the teenies) but over a larger period you see the smoothing effect which at the end of the day all of our retirements are based on.
• 33 ermine February 27, 2018, 10:37 pm

  That FT article was funny. OK so FT readers are probably better off than most, but I was in my late 40s before I had a total networth* that was positive, so the idea of saving up £100k in their early thirties from the fruits of their labour sounded pretty incredible to me. Not impossible – if you had a successful business then maybe, but saving it up from the 9 to 5, nah.

  I left London over 30 years ago for the same reasons as in their discourse

  But if you are a young worker in a city today and feel unable to accumulate savings from your job, take solace

  although their analysis of the hidden parental subsidies of ‘savers’ staying at home was interesting, never really thought of that as a branch of the BoM&D. It was considered somewhat effete in earlier generations to live under your parents’ roof past your mid twenties 😉

  *ie had dented a mortgage and written off housing losses enough for total financial NW > 0
• 34 The Rhino February 28, 2018, 1:09 pm

  @ermine
  “In other words, you probably aren’t bad at saving. You are normal at saving. The people who seem good at saving, on the other hand, are actually also normal at saving, but very good at receiving.” (how do you do that quote markup?)

  This is almost certainly universally true. So good savers and bad savers are actually all just normal savers. I buy that.

  I would still say spenders and savers are separate categories though?
• 35 ermine March 1, 2018, 12:20 am

  I would still say spenders and savers are separate categories though?

  Nah. I was a spender, until one day I looked up and saw the writing on the wall, then I became a saver. True, I didn’t generally spend more than I earned, which I think is the secret, you don’t need to save, just FFS don’t spend too much of your future self’s money.

  That moment comes at different times to different people. I was charmed, in that it took five decades for me to realise that sic transit gloria… As Hemingway said in the Sun also Rises

  “How did you go bankrupt?”
  Two ways. Gradually, then suddenly.”

  OTOH it it comes to you earlier, well, you have more time to make use of the wisdom that time passes, and the moving finger writes back for no-one…
• 36 Gordon March 1, 2018, 10:12 am

  I think we all agree there is a housing crisis in the UK (especially in the South East). However, does giving housing benefits to millions of EU migrants make this housing crisis worse? Would it not be better to stop giving housing benefits to migrants? Especially since the Government is borrowing money to pay for these housing benefits…

  One minute this website is banging on about the housing crisis then it’s banging on about the evils of Brexit. It’s quite amusing watching the intellectual inconsistency.
• 37 The Rhino March 1, 2018, 11:23 am

  @ermine – seriously – how do you do those quotes? 😉

  Maybe by spender I do mean someone who spends everything or possibly even a bit more than everything? I think that carry-on is a different mindset from anyone who saves, even if its only a little bit?

  As for the moving finger – well I think that is hugely important to internalise, but the brain is funny old beast in as much as it is constantly trying to convince you that you are immortal and you have all the time in the world.
• 38 ermine March 1, 2018, 2:41 pm

  @TR use the HTML blockquote command (and the closing one) Let’s see if the pre command is supported

  some mighty quote

  like this…
• 39 ermine March 1, 2018, 2:41 pm

  Drat. the pre command isn’t supported. GIYF on the blockquote HTML tag 😉
• 40 The Rhino March 1, 2018, 3:06 pm

  It is a truth universally acknowledged, that the Ermine is mightier than the Rhino..
• 41 The Rhino March 1, 2018, 3:07 pm

  @Ermine – got it!
• 42 ermine March 1, 2018, 4:00 pm

  As for the moving finger – well I think that is hugely important to internalise, but the brain is funny old beast in as much as it is constantly trying to convince you that you are immortal and you have all the time in the world.

  Ah, but Terror management theory is behind a lot of what we do well, it seems!

  It’s a tough one, I suspect I should probably be spending more, bearing the unimplorable moving finger in mind. But then the win of having clawed my time back from the Man is greater compared to the extra stuff that spending more can buy me, although I do acknowledge perhaps the more extraverted need more stimulation which is often to be got with money, this balance will be different for others.
• 43 Ducknald Don March 2, 2018, 10:19 am

  >However, does giving housing benefits to millions of EU migrants make this housing crisis worse?

  Millions? An exaggeration surely.

  The real problem with housing is we have gone from having three generations in the population to four. Despite knowing this for decades we completely failed to build enough housing. Immigration has an effect but it’s pretty small compared to the demographic changes.
• 44 The Investor March 2, 2018, 12:12 pm

  The real problem with housing is we have gone from having three generations in the population to four.

  I’ve never heard it put that way before. Pretty succinct! We can also add in the impact of more people choosing to live alone, of course. (When they have a choice! 🙂 )
• 45 e17jack March 2, 2018, 2:24 pm

  Just to return to the CGT on BTL issue – i seriously doubt many landlords bother to declare or pay CGT.

  It may seem pessimistic of me to declare that i consider so many of my fellow countrymen to be fundamentally dishonest, but why is this tax not collected automatically via Land Registry records?

  It is essentially an honesty tax, and given the tax evasive nature of the average multi BTLer or property developer – i can’t see many of them stumping up.

  My suspicions on this are raised by local property developers and seeing the slim margins they work on. There must be developers up and down he country renovating and flipping property for a quick gain – and you can guarantee only a small proportion are even aware of their CGT liability.

  Would love to see some figures on total property sales (for non-primary residences) and the expected annual CGT take vs the reality.
• 46 Factor March 2, 2018, 2:45 pm

  @TI (44) “….. more people choosing to live alone …..”

  Or returning to living alone, when obliged to, via break-up or divorce.
• 47 The Rhino March 2, 2018, 4:14 pm

  @e17jack – I actually doubt that is the case. It would be very easy for HMRC to hook up with land registry to see whether sales tally with CGT payments. They can also look at whos been making council tax payments and how does that tally with land registry? I’ve already had a note from HMRC reminding me to declare in my next return. I sold a BTL last autumn.
• 48 Marked March 2, 2018, 5:20 pm

  e17jack

  Renovators and Developers do not pay CGT . They pay income tax / or Corporation Tax depending on if in a Ltd company or not.

  Regarding people not paying CGT on a BTL, that could be very true. After all you’re not “compelled” to do a tax return if you’re in a salaried position until you’ve earnt > 100K per year. However most BTL’rs will in order to fill out the income and expenditure columns.
• 49 Bob March 3, 2018, 6:21 pm

  Will they know??

  I have just received a closure notification from HMRC following a ‘compliance investigation’ into my last tax return. One strand of the investigation was for undeclared interest of a few hundred quid owing to a genuine administrative error. E-saver issue I vs e-saver issue II.

  (When you’re forced to hold 9 different accounts to get anything approaching a reasonable interest rate – mistakes happen huh?)

  For the past few years my tax affairs have been relatively complex due to foreign earnings. As such, I’ve had a couple of these checks previously and always come away with the same impressions:

  The compliance officers are reasonable people.
  They know everything.
• 50 e17jack March 3, 2018, 11:16 pm

  @Rhino – good to hear you think checks may be in place

  @Marked – thanks for clarifying that, makes sense

  @Bob – being self employed i fear the audit, my only experience is of a friend who was investigated buy they could pin nothing on him. Ended up bargaining over how much mileage he could claim as an expense, in spite of having paperwork to back up his claim they forced him to accept a lower figure. Turned a bit nasty apparently when they realised they might not cover their investigative costs in extra tax paid – the bottom line i guess!
• 51 ATLANT3AN March 10, 2018, 6:01 pm

  Hey The Investor,

  My mattress is getting more uncomfortable by the day, I’ve had it over 10 years so it’s time to get a new one, I knew I would need to buy one sooner or later. I am so grateful for your website which has helped set me on this path to FI which I feel so privileged to be on yours was the first website that led me to find out about all of this as I was looking for ways to invest a figure of money I had come into and this site was one that came up talking about passive index investing.

  As a thanks, and a sign I enjoy spending money on things that bring great value and joy to me, I feel no remorse buying this and thought I would do so as a thank you to you personally, enjoy your referral fee :). If I don’t like the bed, I will return it before the 100 days and get a full refund.

  Regards,
  Chris
• 52 The Investor March 11, 2018, 10:01 am

  @ATLANT3AN — Thanks for your note, and for buying the mattress through the link! I love mine, comfort and sleep wise. I did find the plastick-y smell took about a week to clear (it’s gas that accumulates in transport) but other people on the Internet report not being bothered in just a few days. Ideally I’d open it an a room you don’t need to use for 24 hours and keep the windows open. I am *very* sensitive to smell though!

  Really glad you’ve found the site helpful.

  Enjoy your sleep!
• 53 TheFIJourney April 10, 2018, 10:28 pm

  Hey the Investor, this is ATLANT3AN albeit under a new name. Just like to update you on the Casper I bought through your link. It’s so comfy, well worth the money. There’s no way I am sending it back 🙂
• 54 The Investor April 10, 2018, 11:01 pm

  @TheFIJourney — Great news! I love mine, too, I’m sure I sleep better on it than before.