How much to put aside for potential repairs?

andre_xs

We are FTB, so unexperienced. In the mortgage application we had to specify how much we spend on maintenance and repair of the house. Since we rented, we spend so far 0 :-)

However, what is a reasonable number? This obviously depends on the property (size, age,...). In our case, it is a mid-terraced house build in the 1950s. Wiring has been renewed in the late 1990s, boiler is ~10 years old.

I'm interested only in necessary repairs, not in "voluntary" home improvement. Do you set aside a monthly dedicated amount for this? For instance, £100/month on an extra savings account?

Irratus_Rusticus

Okay I accept the challenge.

Create a 'rolling repair fund' just like all good landlords do :

(Sadly I've never bothered to do this for myself other than for long term maintenance planning for estate management).

1. Estimate pots of cash needed *now* for a modest roof repair, gutter cleaning/repair, exterior repainting (windows etc), boiler repair, boundary fence treatment, wiring inspecton, tap or ball valve repair etc. Be creative. Add pots to your list as you like (it's not an exam). Check online for average job costs or even get quotes as if you have a job needing done now.

2. Decide on the 'cycle period' each repair is likely to recur: some will be long cycles, some shorter.

3. Decide on a reasonable inflation index (say 2%).

4. Calculate the annual contributions you need to pay into your total repair fund each year. Start saving.

Very rough example

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Boiler repair (if no maintenance contract) assumed every three years @ £100. Need to collect £100 indexed @ 2% over three years:

Yr 1: save £100/3 = £33
Yr 2: save £100+2% less £33 already saved / 2 = £34
Yr 3: save £100+2%+2% less £67 already saved /1 = £37
Total saved after three years = £104

Do same calculation for each pot over whatever cycle for that pot (just do this for a few years unless you are really anal). Spreadsheets are fun.

Add each pot to save for each year and that is your annual maintenance fund. If the repair isn't needed within its cycle hold that pot on (annual indexed) ice and save for something else, like a nice holiday. You deserve it.

What happens if you need one pot before you have managed to save it up? You rob the other pots' portions already saved because you assume the overall costs will average out over time. And you revise your cycle for that pot. This is all just theoretical fun anyway.

If you can achieve this kind of repair fund you will beat most professional managing agents who suck a finger and hold it up to the wind to set an annual repairs fund. But they aren't paying the cost themselves. :cool:

moneyistooshorttomention

I don't think most of us could answer that with a fixed figure. Reason being just how many of us live in houses that aren't "finished". My last house was a "starter" one and I basically got it together to "starter" standard (rather than "stay put for evermore" standard) and then groaned and spent any time the house needed something repaired. I cynically think that most money that would be deemed as "maintenance" money is actually = money spent on putting right bodges/cheapskate ways of doing things by previous owners (ie rather than really being "maintenance" iyswim).

This house is being got together to "permanent" standard at a level in accordance with it being a "standard" house (ie small detached with garden). Hence - I'm doing everything the house needs doing (currently got to habitable standard and will finish it as the money comes in).

Once its finished - then I really don't expect to spend much money on maintaining it at all. Maybe replace the boiler once (as I'm early 60s and replaced it 2 years ago - as part of making the house habitable) and I expect it to last, say, 15 years. Maybe re-decorate inside the house once or twice during rest of my life. Don't know how often I will feel the (painted) outside needs re-decorating (maybe every 10 years?). I've replaced all floor coverings in this house and the carpets should be good enough to "see me out" I'm hoping (as I estimate they should last 20-30 years).

So, once my house is finished, then I guess I would allow:
£100 per year for exterior house redecoration (done every 10 years)
£200 per year towards boiler replacement every 15 years (ie once in my case)

and that would be it and hoping not to have to spend any more.

I will be getting my new kitchen the house needs when I can afford it. If I were to get the type of cheapie kitchen units I put in my last house or the last owner put in this house - then I estimate that standard of kitchen lasts 15 years. I will be putting in a decent-quality kitchen and therefore expect it to see me out.

casper_g

If you go for Irratus's approach of saying, for example, that the boiler will need repairing every few years at a cost of £100, so save £33 per year, then what happens if it actually needs repairing next month, at a cost of £250? As he says, hopefully it will balance out, but (a) somebody somewhere will be unlucky and (b) your estimates might have been a pile of horse dung in the first place.

My preferred approach is to work out the worst possible thing that could happen - say the boiler breaks down and is beyond repair - and assume it could happen at any time. This scares me enough that I save hard until I have a big enough savings pot to deal with the hypothesised worst credible event (which might take quite some time). Then I can relax a bit. But not too much, because what if I need a boiler tomorrow and a new roof the day after?

It's just possible my approach may be excessively pessimistic, and it does mean I don't spend much on lavish holidays!