A FIRST-time buyer from Newbury in Berkshire used 12 years’ worth of birthday money and cash from summer jobs to pay for her £202,950 flat – and she did it all on her own aged 25.
Sian Dennis, now 27, bought her one-bed town centre flat in April 2017 using the government’s shared ownership scheme.
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The communications manager had been saving since she was 13, tucking away cash gifted to her by family on her birthday into a savings account, as well as most of her wages from her Saturday job as a waitress.
By the time she’d finished university aged 23, Sian had saved up £10,000.
But as she was single she knew she’d need more than that to secure even a 5 per cent deposit on a flat in Newbury, which cost around £240,000 on average at the time, according to property portal Zoopla.
She moved in with her mum to save on rent, paying £100 a month towards her keep – helping her to put aside between £600 and £700 of her salary a month.
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Two years later, she’d managed to top up her savings by another £5,500 but house prices in the area she’d grown up in continued to creep up too.
Sian feared that she was facing another 10 years of saving, until she looked into the shared ownership scheme.
With her £15,500, Sian realised she had enough for a 20 per cent deposit if she only bought a 25 per cent share of a flat, leaving her with some cash to spare.
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Now, she pays £140 a month for her mortgage and another £532 a month in rent to the housing association that owns the remaining 75 per cent.
We sat down with Sian for this week’s My First Home, where we talk shared ownership and buying property own your own.
What’s your flat like and where is it?
I bought my place back in April 2017 and it’s right smack bang in the middle of Newbury town centre in Berkshire.
I absolutely love my flat. It’s a one-bed property and I’m on the top floor of a new build block so I’ve got great views of the town and the parks and even Donnington Castle in the distance.
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It’s technically a maisonette so I have my own front door, which I know doesn’t sound like a big deal but it makes me feel even more like it’s mine.
I think it’s like a Tardis – it’s deceptively bigger on the inside.
It’s the opposite to open plan, so it has a separate kitchen-diner and living room, and one big bedroom.
I’ve got a south-facing living room so it gets plenty of sunlight and there’s a small patio space too that’s big enough for a few plant pots and a chair and table.
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Even after two years of living here, I sometimes find myself looking around and thinking “how have I managed this? This is my home.”
How does it work with shared ownership?
Shared ownership means that I’ve taken out a mortgage for a portion of the property and the rest is owned by the housing association.
When I bought it, the flat was valued at £202,950 and I bought a 25 per cent share in it.
My stake was worth £50,738. I put down 20 per cent of the value of the portion of the property that I was buying, so that was £10,250.
My mortgage is for the remaining £40,488 over 35 years. I took out a five-year fixed-rate deal at 2.23 per cent so my monthly payments are £140.
On top of this, I pay £532 a month in rent and service charges to the housing association, One Housing, that owns 75 per cent of the property.
Why did you choose to go down that route?
My parents are from Newbury and I grew up here so I didn’t really want to leave the town.
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I moved back in with my mum after uni when I was 23 so that I could save to buy my own place. I didn’t want to rent as I hated the thought of it being dead money.
But it’s a commuter town and over the years, more and more Londoners were moving out to Newbury because they were priced out of the city. It made house prices here shoot up.
As a single person, I realised that owning a home here for me was becoming more and more unaffordable, even though my savings were going up.
I’d noticed this new block of flats being built a few years ago and registered my interest.
It was the developers who told me about the scheme and I realised that it was possible with the savings I already had.
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I’d been saving for a few years and was looking around properties online to get an idea of what I could afford on my budget – which wasn’t much.
I didn’t really know anything about shared ownership at the time, only that it was being pushed under the government’s Help To Buy scheme.
Honestly, if I hadn’t stumbled across this development when I did I reckon I’d have been living at my mum’s for another 10 years before I’d be able to afford to buy on my own.
How did you save enough for the deposit?
By the time I bought the flat, I had about £15,500 in savings in total.
I already had around £10,000 in savings which I’d been putting aside for 10 years – I’m talking all my birthday money since I was 13, wages from waitressing during the summer holidays and things like that.
But if I wanted to buy a place on my own I needed more than that.
What is shared ownership and are there any downsides?
SHARED ownership means that you co-own a property with a housing association, which will charge you rent on its part of the property.
You can buy a property without a mortgage, but if you want to borrow money, many mainstream banks and building societies offer shared-ownership mortgages.
They’re not just for first time buyers but they are reserved for specific properties.
You can buy anything from 25 per cent to 75 percent of the property, and you can increase the amount you own over time – this is called “staircasing”.
Unlike private renting, you won’t have a landlord who can ask you to move out at any time, and your rent rate is likely to be less than market value.
The downside is that each year your housing association reviews your rent, which may rise.
You’ll also need to factor in any maintenance costs – if anything goes wrong or is broken then it’s your responsibilty to fix it.
Bill payers will also have to pay service charges which may not be included in your rent. These may also increase in the future.
Home owners are unlikely to be able to sub-let the property either and you may be restricted with what you can do to the property outlined in the lease.
If you’re planning on staircasing, then make sure you’ve taken into account the extra solicitor’s fees and stamp duty that you’ll have to pay for the increased share.
Home Owners Alliance warns that selling a shared ownership property may not be straightforward.
This is because the housing association gets first dibs on buying your portion back, so you won’t be able to accept a higher offer from someone else.
You can find out more about the shared ownership scheme with our guide.
I’m quite financially focused so once I’d set my mind on it I was going to do it – I basically didn’t have a social life for two years.
I gave my mum £100 a month towards my keep, and when I was on my first job out of uni I was putting away £250 a month.
Then after the first year I got a better paid job and upped this to between £600 and £700 a month.
I didn’t set a budget to live off but I was just super careful with what I spent.
I was invited out for dinner a few times a week but I had to think to myself, did I really need to do that? Instead, I’d only go once a month.
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I didn’t go on holiday at all during the two years but I also didn’t have to cut back on the gym or anything like that because I’d never signed up to one.
I didn’t sign up to a Help To Buy Isa because I think I was just too lazy but I wish I had as the government bonus would have helped cover my solicitor’s fees.
How was it going through the whole process on your own?
I always knew that I wanted to buy my own place and I wasn’t going to wait around for someone to come along and do it with me.
It does mean that I did have to foot the bills on my own, like the £1,000 I had to pay the solicitor and mortgage fees.
I also just missed out on the first-time buyer stamp duty relief so had to pay a two per cent tax on the value of my share of the property which came to £1,015.
I could have put more money down for the deposit to make my mortgage repayments smaller but because I was on my own I didn’t want to use all of my savings, so I kept £2,000 aside.
What if something went wrong when I moved in? The thing with shared ownership is that I’m responsible for getting anything fixed and I don’t have anyone to share those costs with.
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I’d also been so tight for the past two years that I didn’t want to live on a shoestring any more if I didn’t have to.
I also got a mortgage broker to help me because I had no idea what I was doing. It also helped because at the time, there weren’t many lenders which offered mortgages for shared ownership.
But I didn’t mind doing it alone. I was so excited to be honest and I couldn’t believe I’d done it.
I relied a lot on gifted and secondhand furniture though as again, I had no one to split those costs with.
My grandparents bought me my bed, my uncle went halves with me on a sofa and all of my pots and pans were secondhand given to me from people from work.
Dad gave me the telly and then I went to Ikea to buy everything else on a budget.
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I’ve also fixed in on all my bills so I’m not hit with any emergency big spends that I’d have to deal with on my own. It’s easier to budget like this.
Are you planning on buying a bigger share in the property?
I wanted to have a calm few years after I bought the flat so I didn’t really think much about increasing my share – I’d been saving for years so I wanted to enjoy my money a bit.
But even a few years on, I’ve realised that I don’t think I will bother staircasing at all.
I didn’t realise when I took on the property that if you want to increase your share, although it’s possible, there are a whole tonne of fees you have to pay to do to do this.
First of all, my housing association will only let me staircase in increments of 10 per cent, which I can’t afford right now – I know others do let you do it in 5 per cent stages.
Second of all, you have to pay valuation and solicitors fees too which adds up and I just can’t see that being worth it for another 10 per cent stake.
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I do think it’s a bit backwards because they’re supposed to encourage you to buy more of your home but it’s so expensive to do that.
For now, I’m sticking with 25 per cent. The way I see it is I’m investing in equity that will help me towards the deposit of my next home if and when I want to upsize.
What was is like getting the keys?
The whole process took just three months so it was so overwhelming when I finally moved in.
I cried on the first day. It finally hit me that I’d be living on my own and I couldn’t believe I had my own front door, my own doorbell and everything.
I reckon I’ll be here for another five years at least. This flat is a brilliant place for me to start on the property ladder.
But one day, I do want my own garden and a parking space. It drives me nuts that I don’t have one here.
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