Monday, 21 June 2010

Renewable Heat Incentives

Following on from my Feed In Tariffs Blog (see April 2010 Blog Archive on the right), we now have a further Incentive Scheme under consultation and to be introduced in April 2011 called the Renewable Heat Incentives (RHI).

Unlike the Feed In Tariffs scheme which is designed predominantly around paying you to generate electricity, the RHI scheme is designed to reward homeowners for installing Renewable Heating technologies with an annual payment for the expected life of the product.  The payment is predetermined based on typical output at a typical kWh rate.  For example a Solar Panel which provides hot water has a life expectancy of 20 years and may produce around 2200 kWh per annum at a deemed rate of 18p making an annual payment of £400 for 20 years.  Unlike the Feed In Tariffs scheme there will be no metering of actual units produced for this scheme.

The scheme also covers technologies such as Solid Biomass Boilers (15 years @ 9p per kWh), Ground Source Heat Pumps (23 years @ 7p per kWh), Air Source Heat Pumps (18 years @ 7.5 kWh).  Payments to be inflation linked and tax free.

All installations must be Microgeneration Certification Scheme approved as per the Feed In Tariffs.

All of this is still under consultation so could change before April 2011 but it is looking like a very attractive scheme for Homeowners at the moment. More information on the RHI scheme

Friday, 11 June 2010

The Road to Freedom - How we did it

Do you own a Property Portfolio and your own house with reasonable equity, long for financial freedom and want to travel but fear is holding you back?

Speaking from experience my advice is to stop worrying and start planning. In this blog I will share with you some of our journey on the road to freedom.

First, this is not for people making substantial money from their Portfolio – they don’t need to read this. It is for ordinary people like us who have to be very strict with their finances. It is possible to travel, have fun and live on approximately £14-15k per annum but you need discipline and you must accept it will not be a Millionaire’s lifestyle.

Our property portfolio is mortgaged to around 65-70% LTV and I have a 10 year cashflow forecast on excel. Assuming mortgage interest rates of around 6% and building in contingencies for voids, unpaid rents & running costs it looked like the portfolio would remain £15k or more in the black for the foreseeable future.

Second, you will need to release yourself from any emotional attachment you have to your own home. We built our own home, a barn conversion which we loved but we really wanted freedom and this house was the key. We rented it out, took out a 65% Buy To Let mortgage, bought a Campervan, set aside £30k for contingencies and put the rest in a good savings account.

We spent the next 12 months travelling Europe and as long as you don’t expect to eat out much or buy too many material possessions you really can do it on a very tight budget and have the time of your life. We have been to some of the most famous cities in Europe and camped out on romantic beaches, swam in warm clear blue waters and made dozens of wonderful friends of many nationalities.

Third, you will need a list of good Trades people for call outs and maintenance issues with your properties. Preferably responding via email as this is cheaper, although our best Carpenter still refuses to email – but he is a gem so we accept the additional phone bills! If you can afford an Agent on full management then go for it. We have this luxury on our Student houses as the Agent achieves such good rents that he more than covers his fees but for the other properties we just keep a list of reliable Trades people at hand and leave spare keys with the most trusted people.

During our travels we have carried out minor building works to our properties, responded to electrical emergencies, water leaks, blocked drains, faulty showers, toilets, door locks and installed a new cooker.

Fourth, you will need to be very flexible with your living arrangements. In the summer of our first year of travels we returned and moved into one of our student houses whilst carrying out the annual clean up/maintenance. This is the first time we have lived in the buzz of a city and it was great to be able to walk to pubs, restaurants, theatres and shops for a change. Then, just before Christmas some tenants moved out of one of our other properties so we repaid the £170k BTL mortgage from our savings and moved in to this one, making this our Principal Private Residence - not forgetting to make the appropriate election to the Tax Man of course!

Since then we have remortgaged that house, let it out again and bought a renovation project which is now our PPR or ‘home’ if you prefer the term. Whilst carrying out the renovation we sold the campervan and bought a caravan which we store in France. It’s much cheaper to keep and gives us just as much freedom.

I am typing this Blog from a campsite in the Loire Valley with free wifi. I am sitting in sunshine, by a stunning swimming pool with a beautiful Louis XIIIth style chateau as a backdrop. Our Carpenter has just sent us photos of the new fascias, gutters, porch roof and fencing he installed for us on a property in our absence. We know that we can trust him to do a good job and he is proud that we trust him to do the works while away.

It would give us the greatest pleasure if someone else reads this and is inspired enough to ‘go for it’ – life is for living so live it.