house buying single parent

House buying – luck, privilege, and focus

/ Gracie Sunderland

I wrote last week about buying a $1 milion home: over the last few days we got the keys and have been cleaning, painting and generally getting ready for the furniture move on Monday. Oh, and sort of freaking out about the whole thing but that’s pretty normal.

Some of the discussions I’ve had since then got me thinking – given how hard it is to buy a house as a single parent, how did I get here?

I want to say upfront that I never had a divorce settlement. I didn’t “get half the house” or much less “take him to the cleaners”. For all sorts of reasons that probably require some kind of therapy to understand, my marriage didn’t involve the mingling of finances, or equal financial engagement, at all. The good thing is that we took that attitude to the divorce meaning that I took out what I put in. Given that it was my money anyway, and I also did all the childcare, I can live with that. Note: many other ways of being married, or divorced, or thinking about money and marriage are available, and I wish you joy of them.

My first home purchase was in a tower block (not this one) Photo by Ben Allan on Unsplash

So how DID I get here?

A combination of luck, privilege and focus. It’s important to recognise that the focus itself might not have been enough – luck (mostly around timing) and privilege definitely helped. That’s not to say that this is not an option for others, but I see a lot of people talking about how they bought a house all by themselves whilst the back story shows how much they relied on their parents. So let’s be honest. I found it hard – other people will find it much much harder. But it’s not impossible.

House 1: bought for £55,000 sold for £110,000

My partner and I decided to try and buy twenty years ago, when I was 22. We had been living together for five years and rents in our home town were rising all the time. Even at that point the average property price for a two-bedroom home (a flat in the fancy part of town, a house in the non-fancy) was £170,000, and amount that would have required me to be earning £45,000. I was fortunate to get a great job out of university on £18,000, but that was still a world awya, and my partner’s self-employed income was limited as he established his business.

So we found the only thing we could afford, in a tower block on a housing estate, and bought it. We were always really frugal, and had been saving since we got together, saving £10,000. The flat was on the eighth floor though, meaning it wasn’t possible to get a mortgage. Here’s the privilege: my partner’s parents lent us the rest of the money. We set up a repayment plan in line with current mortgage rates, and continued to be frugal, doing a lot of work ourselves and taking in a lodger in the second bedroom though we didn’t pay off much extra on the loan.

When we split up four years later, we had the flat valued at £110,000. Based on splitting the equity 50:50, I got £30,000. I put this in a savings account and went off to pursue my humanitarian career overseas.

House 2: bought for £170,000, sold for £270,000

So by this point I am 30, and have a baby. I have a confused marriage where he is overseas (and not contributing anything financially or emotionally) and things are rocky. I am back in my hometown and the cost of living seems to be crazy. For the first time, I am fully responsible for another human being and realise I have no idea what I’m doing.

So I decide to buy a house and settle down. I still have an income that counts for a mortgage, even though it’s from a charity based overseas. And since I was living in South Sudan / Uganda / Rwanda for the past four years I have also added to my savings pot so with the equity from my first home I have a £70,000 deposit.

The glorious kitchen of my second home

The luck here is that it is 2009. House prices dropped by 16% in 2008 and I looked at a lot of repossessions which seemed heart-breaking. I wanted to stay on the same housing estate, but also realised pretty quickly that I couldn’t afford to live in another part of town. So I was looking at the lower end of the price range for a house. And my goodness I saw some unloved, filthy heaps.

Eventually I found a four bed house in a quiet cul-de-sac (important on a house estate with a reputation for joy riders) and put in an offer. Then I found that the flipside to 2008 was that banks were not keen to lend money to single people with precarious incomes. Around the same time my lovely granny passed away and left my family an inheritance (likely the only one we will ever get since we are not that kind of family). The bank will still not lend me the money. So again with the privilege – my mum and siblings club together their inheritances and lend me the other £100,000.

It’s hard to overestimate how much work needed doing: it had no heating at all, asbestos in the roof, single glazing, an extension which hadn’t been approved and had to be formalised by building standards, a kitchen where there were actual human turds in the cupboards. Safe to say I called in a lot of favours over the years, and did a lot on credit.

I had another two years overseas with my work, and rented the place out. Since I wasn’t entitled to a pension in that job (long story – I keep planning a series of posts entitled ‘mistakes I made with pensions, and why it’s a massive headache’ so do come back for more) I focused on the house as my main asset and worked on paying off my family. In 2014 I came back, thinking I would stay in the UK, and realised that now my son was older I didn’t want to stay on our housing estate. So I sold the house for £270,000, repayed my family loans, and had £140,000 to use as a deposit.

Phew. I think I would have made it without the family help as banks unclenched and my income settled, but it might have taken a lot longer. And living in a city where house prices have gone up 300% in 20 years, every year counts.

Sensible countryside! Photo by Lawrence Hookham on Unsplash

House 3: Bought for £352,000. Currently worth £400,000

This is my sensible house, and ironically we have only ever lived in it for six months. I bought really planning to stay in the UK, but then with work and other issues (not least pension obsession which kicked in at 35) I took another overseas job with the kids and we moved to west Africa. I rented the house out, and, given that accommodation was provided in my new job, I put a lot of extra money toward the mortgage. I took out a mortgage of £152,000 and currently owe just £50,000 – that means I have paid off £100,000 in five years. I aim to have it completely paid off by the time we leave Denmark.

So there we go. A rollercoaster ride which would not have been possible without the support of family, an early start, a high savings rate and a risk-taking approach. I wanted to just put some honesty out there about how this all happened for me – however hard I work and save (and I do work and save very hard) without that additional help, things would at the very least have taken a lot longer.

So – whats your housing story? And how can we think about collectively helping one another for those people in our situation who don’t have family support? I’d love to hear from you!

House buying and the single parent

/ Gracie Sunderland / 2 Comments

I wrote in November that I was thinking about buying a house here in Denmark. My contract is, all things being equal, at least for another 3.5 years, which means an awful lot more horribly expensive rent. Plus since my landlord is coming back and we have to move anyway, incurring both the costs of spending an awful lot of time looking for somewhere and organising and paying for movers.

So we have bought a house!

I’ve been looking since September, and it has been absolutely brutal. As with many places, already high house prices have continued to rise during COVID and family properties (as we are looking for) have increased even more as people look to move out of apartments. In Denmark, the supply is also quite low, meaning that there just aren’t enough properties to go around. I almost wish we had bought the first thing we saw in September, since that will have gone up in price by about 8% since we saw it.

The ideal Copenhagen home (clue: our new house does not look like this). Photo Credit, Architectural Digest

It is even worse in the UK where house prices are soaring. People moving out of cities, or flats; a lack of housing stock; the temporary suspension of Stamp Duty; and realising what an incredible amount of house you can buy pretty much anywhere in the country if you sell a London home means that the average house price in the UK is now £256,000 – up a whopping £100,000 since 2012.

In the UK, you can usually borrow four-and-a-half times your income meaning you need to earn £56,888 in order to qualify for a mortgage. With the average income being just over £31,400 (and that already the median, so it will be skewed by very high and very low earners) this means that the majority of people – and any single person who is not a majorly high-earner – is priced out of the UK housing market. Since one-third of single parents were living in poverty before the pandemic, and have been one of the groups hardest hit in terms of income partly due to an inability to work and manage kids at home alone, buying a house can seem a million miles away from many single parents who are already working their hardest to create a secure future for their kids.

Denmark, like many countries, has other alternative options including Andelsbolig which is co-operative housing offering both affordable rental and houses to purchase. The conditions of being part of the co-op mean that it’s not possible to take advantage of the system and the apartments (not usually houses) stay in the relevant pricing market and can benefit others in the future should someone move on.

This is Iffley Lock in Oxford, near Iffley, where I would buy a house if I magically became a millionaire. Photo by Lia Tzanidaki on Unsplash

This month, the Australian government took the incredible step of recognising this issue for their citizens and actually doing something about it. The New Home Guarantee scheme will allow single parents to buy with just a 2% deposit, with the federal authorities guaranteeing the other 18%. It is only available to 10,000 women (about 10% of Australia’s 1 million single mums) and whilst that might be a drop in the ocean it has to be celebrated as an approach which both recognises that we have assets and incomes but struggle to get over specific hoops in many financial processes.

I wonder if the UK Government would back a similar scheme? Though with the income needed to buy a house, there will still be struggles for the majority of the almost 3 million single parents in the UK. Sometimes I think the best solution is housing co-ops where we can live with multiple families and share some of the burden.

Together for all! Photo Credit: Radical Routes (and check them out if you are interested in housing co-ops)

But until we get to radical social change, creating support structures so that all families can leverage their income-generating power to build assets and have somewhere secure for their children to grow, should be an area for policy makers to think about. Generational wealth has a significant impact on society, and single parenthood – and the intuitional fabric which keeps people in poverty stuck in that cycle – prevents people from building wealth to hand on. There is a direct relationship with this and continued income inequality which has wide-ranging social implications. And, if you are living it, absolutely sucks you dry.

What’s your story been with housing? I would love to hear from you!