Saturday, 13 August 2011

Broken Dreams

If I was thinking of moving onto the canal today, I am convinced that any advice that I might give to myself would be "It is time to call a halt and take stock. There is no real safe prospect within the foreseeable future of moving onto the UK Inland Waterways." There is so much that is undetermined about our country at this time. It would be a foolish choice to make for anyone looking to raise equity from a property sale. It holds no better prospect for anyone paying cash to build a boat. Their is also enough doubt for anyone buying second hand, to take stock before making a purchase. Worst of all is the future of the canals.

A large number of people like us have reached retirement age and are now wanting to spend a few years on the canal. Purchasing second hand or commissioning a boat being built is a long awaited dream. One problem with having any dream is that it is a very fragile concept. The dream is good for helping to get through the day on day of grind at our place of work, as the clock ticks towards the fruition in the autumnal years of our lives.

There are many caveats for the foreseeable future.

Now, for everyone in the UK the dream finishing line has been moved. This is due to pension qualifying age being set further into the future. Add into this mix the prospect of pensions shortfalls, which certainly did not form part of the much vaunted private pension and home ownership dream of Thatchers government. You must tread this path very carefully there are many pitfalls along the way.

For some people, selling their home in the future was part of the dream concept. Downsizing was the clarion call. The equity raised was to be used to commission their own boat to be built. Now there is a major downturn in domestic house sales. There is a very large number of property for sale and most have seen a major fall in the expected sale price. The amount of the advertised price and the actual sale price can be significantly different. Freed up equity in a property now comes at a price.

There is yet another fly in the ointment or should that be salve.

For some months we have been looking at purchasing a property to use as a rental income generator. Money in the bank is now money at risk low interest rates don't help either. Estate agents are overpricing properties. They do this and create that ray of hope in the hearts of many families who are struggling to meet their commitments. But the market is a buyers market and if you shop around you can always find something offering better value. Long gone are the days when bidding and counter bidding was the normal way of establishing the purchase price. Now the vendor is the potential victim and the cash buyer dictates the price. We have found that we need to look at properties that are above our real budget figure. because, there is an expectation that the buyer will now bid less than the estate agents advertised price.

House vendor/buyer chains can be very long and a difficult prospect to finalise we know of one chain that has just had its second birthday and there is still no real prospect in the near future. What price the dream of a canal boat now.

There are several things that we have noticed about the property market. One is that the general maintenance standard of of much of the available property has fallen. Estate agents describe this as a tired appearance and leaves room for improvement to the discerning buyer. Typical estate agent claptrap to paper over the cracks.

This lack of maintenance is because people have in some cases sensibly invested any spare money in paying off lumps of their repayment mortgage. They did this rather than do the wear and tear property upkeep. This was their insurance against the ever present dream cruncher, the dreaded negative equity.

Over three quarters of a million houses in the UK are in negative equity, that’s a lot of despair and despondency.

I don't claim to fully understand the property market, but some things are very apparent to us as lay people doing the rounds of property viewings. One is that the number of repossessed homes is growing. Look an any estate agents website and you will find many pictures of properties that are devoid of furniture. The previous families have departed.

Some have moved into new builds, the majority have moved into rented accommodation. Their dream of ownership of a family home, lies broken alongside their dreams and aspirations for the future. From our time spent looking at these properties we have seen sales where significantly lower bids, as much as a third reduction are being accepted.

Commissioning a boat build is fraught with its own set of problems.

To be honest in the present climate I would not touch a boat build with the mythical a barge pole. A sail-away on the stocks, like house prices is also subject to negotiations and I would bet that many self respecting shell builders would be prepared to turn the pile of rusting steel into cash at a significant discount.

Not all boat builders are the same, the good ones are the expensive ones. The cheap ones are the ones with just in time cash flow methods that are always teetering on the edge. But the teetering is with your money and when they go under it is you who is left high and dry.  This should not be the case, because like a house you are the purchaser and it should also be a buyers market.

The story of commissioning a boat build and the very real threat that such a prospect offers is very apparent at the moment. The recent débâcle with NB Waiouru and the treatment metered out by Ben Harp of Harp Narrowboats is a typical case in question. This has set back the boat shell building and fit out industry decades. Yet Ben Harp is carrying on a tradition of some boat shell builders who have been less than honest.  Completion dates that are months late are not unusual.

The threat to your pile of dream money is very real. In real terms Narrowboats are going down in price on brokerage. Sales have fallen away, its part of Thatchers market forces concept. But I still don't think that I would be looking around for that "bargain hunt" boat.

What does the future hold for the inland waterways as a charity.

There is another significant uncertainty, its the future of the canals. When British Waterways the charity makes an appearance in Private Eye you know that there is a problem. Private Eye has a track record for sniffing out the unsavoury smells in all walks of life. 

Quote "In the rush to dump British Waterways, the government is planning to hand over state powers – including forcible entry, search and seizure rights – to a charity for the first time."

There is no reason to believe that the situation is different on this occasion. I have said it many times and the situation is in my opinion still the same "the charity figures don't stack up." Questions have and are currently being asked in both houses about the validity and viability of the proposed change to a charity status.


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