For A Young Couple That Have To Sell Their Home

Couple who became ‘accidental landlords’ when forced to rent out their home due to negative equity now have £5m property portfolio

For A Young Couple That Have To Sell Their Home

  • The pair had negative equity during the house price crash in the 1990s
  • Went on to renovate eight properties, making up to £70,000 per house
  • Now employ 10 staff to help run their property company

The house price crash in Britain in the early 1990s brought many misery through negative equity and repossessions.

In 1997, Rick and Lorraine Gannon were initially mortified to discover the new-build house they’d paid £84,000 for had fallen below the amount they owed on their mortgage.

And so they became “accidental landlords” and kept hold of the property in Nottingham, renting it out until the market recovered while they lived elsewhere.

“It was not something we planned to do,” says Mr Gannon. “Those were the days when it was easier to get a second mortgage.”

It was a wise decision and they got lucky 18 months later when their house shot up in value due to the area being developed, making them £100,000 in profit on the sale.

Rick and Lorraine Gannon now employ 10 staff in their property business (Photo: Rick Gannon)

Investing still appealing

“There are still plenty of opportunities to make money in property investing for someone prepared to be proactive and graft”

Rick Gannon

This was the start of a venture that would see them eventually quit their day jobs to become property investors with a portfolio worth £5 million and 120 tenants.

Nowadays, investing in property is much tougher than it once was, thanks to a stamp duty tax crackdown on buying property investments and changes in tax relief for landlords.

House price rises have also stagnated in many areas, denting the prospect of making money through property inflation, plus there’s the uncertainty of the effect of Brexit on the market.

But Mr Gannon, a father-of-two, believes investing in property is still appealing, even for the first-time buyer. “Whatever happens with Brexit, house prices will still go up in the long term.

“There are more challenges now but you just have to adapt. There are still plenty of opportunities to make money in property investing for someone prepared to be proactive and graft.”

A before photo of one of the properties the couple has renovated (Photo: Rick Gannon)The kitchen after (Photo: Rick Gannon)The living space and kitchen (Photo: Rick Gannon)

Renovating properties

“We avoided houses that needed real structural work doing to them and went for ones that needed repurposing”

Rick Gannon

Over the next five years, Mr Gannon, then a policeman, and Lorraine, an accountant, used the profit from their Nottingham house to buy and renovate eight properties around Worcestershire where they moved to.

Neither had a lot of experience with DIY but taught themselves the skills as they went along. This made them a tidy £15,000 to £70,000 profit per property.

“We avoided houses that needed real structural work doing to them and went for ones that needed repurposing to make them suitable for families.

“Tired, outdated looking properties that needed the s of rewiring, a new bathroom and kitchen, perhaps a wall knocking down between an old-style separate toilet and bathroom.

“Cosmetic stuff – needing new carpets, decorating, the garden landscaping.”

Rick and Lorraine look for properties they can add value to (Photo: Rick Gannon)The transformation shows how they use the most of a space (Photo: Rick Gannon)

From hobby to business

“The majority of our properties are house shares as they can potentially bring bigger rental yields”

Rick Gannon

The Gannons had a break from property for a few years, but the care needs of their disabled first child Ben – and his future financial needs – prompted them to turn their side-line into a proper business.

The profit from renovating had largely gone on paying off debts, but they had £20,000 left, and with a family member also investing, they bought a five-bedroom house in Worcester for £187,000 and spent £20,000 on renovation, including a downstairs bathroom and turning the living room into a sixth bedroom to rent it out as a house share.

This brought in a monthly income of £800 – shared equally with their family member, as was the equity – and two years later they remortgaged it to allow them to buy another house, and the property was valued £100,000 higher. Mr Gannon says a mix of their alterations and the area being regenerated, including a pub next door being sold, helped the price rise.

“The majority of our properties are house shares as they can potentially bring bigger rental yields,” said Mr Gannon. “We do have about 30 single-use properties. We don’t dismiss them as long as we get a good price for them.

“We look for properties to add value to through adding an extra bedroom, using a loft space, or building out on the back with planning permission. It all increases your rental income with a house share.

“Without the potential to do something extra to a property it probably isn’t worth us going for.

“That’s the model we’ve continued with – buying at a good price in the right area, adding value by renovating, and re-financing to invest again. We call it ‘momentum investing’.

“The peaks and troughs of the housing market don’t worry us, as we’re prepared to buy and hold.”

Mr Gannon with daughter Charlotte and son Ben (Photo: Rick Gannon)

Adapting as you grow

Two years ago, Rick, now 47 and Lorraine, 42, bought 28 flats in Worcester for £1.1 million and refurbished them into luxury accommodation. When they recently re-financed, they were valued at £1.75 million.

“We spent £175,000 on renovating, so again, just the house we bought with a family member, it has cost us nothing to buy them and set them up and we’ve made a profit on their value and now they bring in a good monthly income.”

The pair have never used a property management agency, preferring to keep costs down by dealing with with the collection of rent and repairs themselves. But their growth brought the need for extra help and they hired a team of 10 staff and opened an office.

“I knew landlords who were trying to save a couple of hundred quid by physically going to deal with a broken washing machine themselves, even if it they had to drive for hours to get to and from the property.

“That’s when you get caught in the ‘landlord trap’. That time trying to save a little can be better spent growing your business.

“Eventually you need to use an agency or get your own staff.”

The Gannons, who also invested in commercial lets, pubs, and holiday lets, also found themselves overwhelmed by all the emails and paperwork involved in managing the properties and, having teamed up with a software company, developed their own process to automated it all using a single system.

They then added another arm to their business – Go Tenant, a property management software which they sell to landlords.

Read more: Woman with no DIY skills makes £85,000 in a year from buying and renovating houses after watching tutorials

Grabbing opportunities

The Gannons bought 28 flats in Worcester which they turned into luxury apartments (Photo: Rick Gannon)

In total, the couple’s business, New Era Group, now brings in £480,000 a year from their property portfolio. Their goal is to keep growing their business and retire in 10 years’ time.

Mr Gannon says Brexit won’t deter him from investing, despite widespread uncertainty over the effect it will have on a hefty proportion of private tenants who are EU nationals.

“We do have a lot of foreign renters,” he said. “But no-one knows what the legislation will be and we don’t know what’s going to happen to house prices.

“The way I look at it is, if someone had held back from investing three years ago when Brexit started they’d have missed a lot of opportunities.

“The market has slowed but if you are on Right Move and Zoopla day in day out you’ll find good deals, you never know when someone’s personal circumstances change and they want a quick sale at a good price.”

The Gannons’ advice for making buy-to-let profitable

Get your maths right – Finding a property at the right price is just the start. Make sure you’re being realistic about how much work on it will cost.

Location – This is key to attracting the right kind of tenant. Bear in mind the distance to schools, shops, GP surgery and public transport links, as being closer to these things is ly to raise your property’s appeal. If you want to let out a house-share to students, being nearby their university is important.

Add value to the property – Look for houses that you can extend or repurpose by knocking down walls to enhance the space. Make spaces functional to increase your rents and add capital value. All tenants want space to live in and store their stuff in.

Vet your tenants carefully – A good tenant will pay on time and look after your property, keeping your running costs lower.

Systemise – Systems save you time, energy and money. Find tools to automate your business. Agents take high fees and percentages, if you can find a way to self-manage you can increase profits.

Be cost conscious – Shop around for materials, mortgage rates, insurance, maintenance and other services.

More real life

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Leaving Home… a teenage dilemma

For A Young Couple That Have To Sell Their Home

    “An Englishman's home is his castle”; so says an old proverb. “Home” is perhaps the most important thing in a person's life – “home sweet home”, as they say. Yet in Britain's teenage culture, home has long been seen as a place to leave, rather than a place to live.

And while the age of independence is, for many young people, becoming later and later, the desire for independence is developing at a younger and younger age.

    Leaving home for the first time has always been a difficult turning point in life; today the difficulties are perhaps greater than ever before.

Click here to show vocabulary guide

(If the vocabulary guide does not show up (some smartphones), see guide at foot of this page)

Section 1      Background.


    Almost every 16-year old has thought about leaving home.
Many teens dream about leaving home: but the reality can often be much harder than they imagine.     Many have been thinking about it, off and on, for years; some have been dreaming of independence since they were twelve, or even younger.

Leaving home is part of the teenage dream.
   Recently, a survey of “Young People's Social Attitudes” asked British teenagers for their opinions about leaving home.

Forty-nine per cent of 12-15 year olds thought that teenagers should be allowed to leave home at the age of 16; another 12% said 17, and 8% said “when they want”.

Only 23% of young teenagers thought that they should be obliged to live at home until they were 18!
    Yet the teenage dream seems to conflict with the experience of real life; when the same question was put to 18 and 19-year olds, almost half replied that teenagers should not leave home before the age of 18.

    Nevertheless, leaving home is part of the process of growing up. Many teenagers leave to go and study or train or look for a job in a different town or city, returning home when the money runs out. Others leave because they just want to get out. Most, specially younger ones, are happy to go home again later; for a small number, leaving home is a definitive break.


     Every year,  thousands of young people in Britain leave home in search of a better or more exciting life; many of them go to London, attracted by the bright lights, the night life, the youth scene and the hope of finding work.

    16-year olds who leave school with few or no qualifications find it very hard to get jobs; indeed, in some British cities, particularly in the North, finding work is almost impossible for unqualified people, specially young people.

London, however, has less unemployment and more jobs; and though no one imagines that the streets of the capital are “paved with gold” (as in the legend), many teenagers make their way to the capital, hoping to set up a new home of their own.

    Though there are indeed more jobs in London than in most other cities, they are not always good jobs, and the the dream of leaving home and finding a job often turns out to be just that; a dream.     Many return home; some become homeless.

    Homelessness is not a new problem, and there are many associations that help homeless people to find somewhere to live. And although, overall, less people keep coming to London in search of a new life, the number of young people doing so has gone up sharply; their reasons for coming have changed too.

   London's biggest homeless charity, Centrepoint, reported that causes of homelessness among teenagers have changed ; instead of leaving home because of “pull factors” (the attraction of London, the hope of a job) more and more young people now leave home because of “push factors”, victims of broken homes, poverty or physical aggression.

    It's all part of our changing society. In 1961, only about 5% of children (about half a million children) in Britain lived in single-parent families; in 2013, 22% of children, that is three million children, lived in single-parent families. Single-parent families are generally poorer than traditional families.
    Even teenagers with caring parents and lovely homes dream of leaving home. Kids in poor or aggressive homes dream too; in their situation, it's not surprising that they may want to make their dreams come true.

Section 2      Teenagers speak.


“Home’s O.K!” says Simon. “In fact, as far as I’m concerned, it’s the best place to be, even if you can’t always do what you want!! If you live at home, you’ve got to obey a few rules, that’s obvious; but my parents are quite tolerant really! I s’pose it’d be different if they tried to lock me up or something, but they don’t. It’s a matter of respect.. They leave me to it; that way everyone’s happy! Besides, it’s much easier living at home if you can. You get your meals cooked and your washing done for you; and it’s far cheaper than living on your own! I’ll move out when I go to university, but I’ll come home in the vacation. Why not: It’s home, after all, isn’t it?”


    It was one evening in April that Sarah decided to leave home. It was not that she disd her home; not even that she had a lot of arguments with her parents. As a family, everyone got on quite well together; but in the small Dorset town of Crewkerne, there wasn't exactly a lot to do. Besides, Sarah didn't actually live in Crewkerne, but in a village where there was even less to do. She was fed up with school too. Though she had done quite well in her GCSE exams, she had not chosen the right subjects for “A” level and had become disillusioned.     Her parents d the village life; her father, a businessman, was always travelling, and enjoyed coming back at weekends to the peace of  Dorset; her mother had a part-time job in the town. Her elder brother was away at university, her 14-year old sister was, in Sarah's words, “a nuisance”.

    “I just wanted to get out,” says Sarah. “I felt too cooped up; and it was so boring. So I decided to come up to London. For the time being I'm selling beads, but I'm looking for a proper job too.”

    Sarah is one of the lucky ones. Her parents are giving her an allowance until she finds a job, and she lives with two other girls in a flat in Hampstead. She's artistic, she doesn't smoke or take drugs, and can talk intelligently. She'll probably get a job quite quickly.     “I'm glad I left home,” she says; “I'm 18 now, and I'm in charge of my own life. I go home quite often; but I prefer living my own life.”


    Darren claims that he was pushed his home.

    “I lived with my mum and two brothers in Bedford, but I couldn't stand it any more. My mum didn't have a job, and she was always yelling at us. I was in care for three years. Then I went back to live with my mum. In the end I just decided to quit. I don't want to go back; not for a while, anyway.”
    For the last year, Darren has been living in a hostel for the homeless, and at the moment he's doing a training course, to become a builder.
    “There's plenty of work in the building trade in London right now,” he says, “So I should get a job quite easily. Then I'll get myself a proper place to live. I'd to have my own place. A proper home of my own, so as to speak. I can't say I've really ever had a home before.”
Section 3      Living at school.
    Often in Britain, it is parents who send their children to make a new home, away from home. At school.
    For hundreds of years, “boarding schools” have played an important part in British life.
    Not for everyone, of course; far from it. But boarding schools are part of middle class culture, especially in the south of England, where almost 30% of all 17-year olds in secondary schools are in fee-paying independent schools.     Many parents (and grand parents) save money for years, in order to be able to send their children to boarding school.

    “My dad worked as a flying instructor in Saudi Arabia for ten years,” explains Nikki. “He saved as much as he could, to send me and my sister to a good school. He could have spent it on other things; for instance he could have bought a big BMW,  but we've had the same car for five years, a VW, and it was second-hand when we bought it.”

    According to classic images, boarding schools are spartan places, with cold dormitories and strict rules; but the image is no longer true.     “I started boarding when I was 14,” says William; “The worst thing about it was the first few weeks, when it was all new and strange. But now I feel much more independent.     I coming home for hols, but I it at school too. It's not it used to be, with big cold dorms and corporal punishment! You've got to obey the rules, of course; but that's part of life!”         For young people who cannot “go away” to school, university offers the chance of breaking free.     While in many parts of Europe students tend to study at universities and colleges close to home, the British tradition is very different.

    “I certainly wouldn't have wanted to go to college in my home town,” says Tom. “One of the great things about going to university is that you get away from home! Universities recruit nationally, and when you apply, you usually apply to several different universities. You choose your universities for the courses they offer, not because they're near your home.

    I go home to see my parents in the holidays, but that's all. As far as I'm concerned, I've left home now. I certainly wouldn't want to go back home at weekends! That's when everything happens!” Click here to show vocabulary guide

Alternative word guide

A levels: exams taken at the end of secondary school – allowance: some money – apply: be a candidate –
: cheap coloured stones – besides : also – board: to live at school 24 hrs a day  – a break : a complete change – broken home: a broken family – in care: looked after by the local social services – caring: who love and help their children – charity: organisation which helps people – claim : say – conflict with: contrast with – cooped up: restricted, shut in – definitive: permanent, complete – disillusioned: she had lost her hopes, lost her dreams – enjoyed: d – ever-increasing: continually growing – fed up with : tired of, unhappy with – –
fee: money – GCSE: national exams taken at the age of about 16 – grow up: become an adult – hostel: home –
: example – off and on: from time to time – overall: in general – process: system, routine –
: lines, numbers – recruit: attract students – runs out : finishes – second-hand: not new – seek: to look for – single: just one – spartan: without any luxury – survey: study – s'pose : suppose, imagine – trade: profession – unemployment: absence of jobs, people without any work – yell: shout – youth scene: the clubs, meeting places and other things that attract young people –

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Home or homeless?

Find words or expressions in the article that mean
1. To look for ………………………………. 2. Teenagers who are sixteen years old  ………………………………. 3. Who go to London  ………………………………. 4. The fact of having nowhere to live. …………… 5. Families with just one parent  …………………….

………… Read the article under the heading then say whether these statements are true or faIse.. 1. Sarah got on very badly with her parents. T/ F 2. Sarah did not do too badly at school. T/ F 3. Both of Sarah's parents were away at work all day. T/ F 4. Sarah is older than her brother and sister. T/ F 5.

Sarah does not want to continue selling beads for much longer. T/ F 6. Sarah is homeless. T/ F 7. She ought to �?nd a proper job quite easily. T/ F 8. She has not seen her parents since leaving home last April. T/ F Dave's Dog…. Dave wrote down some sentences about boarding school and university in Britain on a sheet of paper.

Unfortunately, his dog found the sheet of paper, and chewed out the middle! Can you help Dave by rewriting the middle part of each sentence, using information from the article!  1. Nikki‘s dad ………………………………………………………………………………….  …………………………. …………………………………….

…..�?ve years ago. 2. William did not ……………………………………………………………………..  at boarding school.  3. British students …………………………………………………………………… close to home. 4. Although Tom ………………………………………………………………………………

 ……………………………………………………………Edinburgh. 5; Tom comes ……………………………………………………………………………………   ………………………………………………………………………….see him.

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How to own a home by the age of 25

For A Young Couple That Have To Sell Their Home

By Cherry Wilson BBC News

Image copyright Mark Hepburn Image caption Mark Hepburn and his partner Laura bought a house with a 5% deposit

Owning a home by the age of 25 has become an unachievable dream for many over the last two decades.

Soaring property prices mean just one in five 25-year-olds own a property, compared to nearly half two decades ago, according to one recent study.

But as the government unveils its Housing White Paper, there are some young people who have managed to buck the trend – without help from the bank of mum and dad.

Here four young homeowners – all couples – who bought properties in 2016 – reveal just how they did it.

Mark and Laura

Name: Mark Hepburn, age 23. A debt collector on £18,500 a year

Lives with: Partner Laura Starkie, age 25. An accountant on £20,000 a year

Location: Oldham, Greater Manchester

House price: £125,000 for a three bedroom semi-detached house

Deposit: £6,250 (5%) with the Help to Buy mortgage scheme (which ended in December)

Why buy a property?

We were sick of living at home with each of our parents and wanted our own space. I'd rather live in a house than just a bedroom. We discussed moving out and renting, but we both agreed it was dead money.

How did you do it?

There was a lot of budgeting. I literally know where every penny goes. I had to drill it into Laura a little bit, but she got used to it after a while. her make-up – she had to go for a cheaper brand. We were both working at McDonald's when we were saving and if there were extra shifts, we would take them.

Image copyright Mark Hepburn Image caption Mark and Laura say they had to change their lifestyle in order to save money to buy their home

Did you make any sacrifices?

There was definitely a lifestyle change when we were saving. We would buy supermarket budget stuff instead of brands. We didn't go on holiday during the time we were saving up – and that was a massive thing for Laura.

How does it feel to be a home owner?

I feel ridiculously happy. I feel proud and our friends are too because they know we worked extremely hard for it. Once you get there, you don't need to worry as much.

What if you need to move?

I recently went for a job in Bolton, which is not that close to where we are now. The salary was £27,000 per year, but I wouldn't move house for that. It would have to be significantly higher to consider jobs away from where we are now.

Image copyright Mark Hepburn Image caption Mark says you need to watch your money if you want to save up to buy a home

Reaction from friends?

I can't count how many times our friends have asked us how we've done it. We just explain you need to save, watch your money and cut back. They're happy for us and we are just trying to get it into them not to leave it too long and to start saving.

Should more young people be able to buy a home?

I have got mixed opinions. When Laura and I were at McDonald's we were on a combined salary of £23,000 and we managed to save up £7,000 between us within a year.

So I don't see how people can't do it. But then we don't have any kids. The Help to Buy mortgage scheme was a God-send.

But if you're stopping something that's so good and helping young people, it's going to cause mayhem.

Ruby and Sam

Image copyright Ruby Willard Image caption Ruby and Sam have bought a two-bedroom terraced house

Name: Ruby Willard, age 22. A recruitment consultant on £19,000 a year plus commission

Lives with: Partner Sam Bardell, age 22. An engineer on £24,000 a year plus overtime

Location: Havant, Hampshire

House price: £182,200 for a two-bedroom terraced house

Deposit: £18,220 (10%) with the Help to Buy Isa

Why buy a property?

It was a case of living at home. I moved back into the box room of my mum's house and I hated it. Sam lived with his parents too so we thought if we can, let's do it – so we decided to save and go for it. We were looking at renting but to us it was throwing away money.

How did you do it?

Being quite tight is probably the answer. When we decided we were going to buy, I thought I'm not going to spend money elsewhere when I don't need to. We did still have a nice holiday to Greece. I get commission and Sam gets overtime so we probably earn £55,000 overall, which meant we were in a position we could borrow maybe more than people on minimum wage.

Image copyright Ruby Willard Image caption The couple's home cost £182,200 and they saved up a 10% deposit

Did you make any sacrifices?

We may have not had such a big social life. We still did things, but we were conscious. What I did was save what I knew I needed to save, and lived on whatever I had left – which was usually about £200 a month. I wasn't buying lunch at work, which would save about £25 a week.

How does it feel to be a home owner?

It was weird at first. When we got the keys it was “are we on holiday?” When things started to come together it felt such an achievement. Everything we had chosen not to do, not going to the cinema one night, helped towards it.

What if you need to move?

We would be open to the idea, but we would probably look for work closer to where we bought a house, so it probably would affect future decisions. If we did decide we wanted to go somewhere else, we would probably look to sell the house and hopefully we will have made some money on it.

Image copyright Ruby Willard Image caption Ruby says owning her own home feels “such an achievement”

Reaction from friends?

It's been quite positive. I have got friends that have bought houses, but a lot of them have had big lump sums of money given to them.

Should more young people be able to buy a home?

Neither of us completed three years at university, so we probably established a career path earlier than those that do go. I speak to a lot of people that have graduated, and they cannot find jobs that will allow them to borrow enough. It takes years to save a deposit, and then house prices go up and they can't borrow enough. I think this is how it is now.

You might also …

Andrew and Kirsty

Image copyright Andrew Douglas Image caption The couple have been told they are “adulting hard” because they have bought a home

Name: Andrew Douglas, age 23. A social worker on £31,000 a year

Lives with: Partner Kirsty Lamb, age 24. A pharmacist on £35,000 a year

Location: Moredun, Edinburgh.

House price: £145,000 for a two-storey terraced house with two bedrooms

Deposit: £21,750 (15%) with the Help to Buy Isa

Why buy a property?

We decided we wanted to get on the property ladder as quickly as possible. If we get on it now, we would be able to buy what we want by the time we are older and looking to have a family.

How did you do it?

We started saving at the beginning of 2015 and were probably saving between £400 and £500 a month each. We did go on a couple of holidays, so although we've been saving, we've still been living. We weren't scrimping, but we do only spend about £30 a week on food. We check receipts and look for the best deals, so that is more thrifty than most people.

Image copyright Andrew Douglas Image caption Andrew and his partner saved around £400 a month each for their deposit

Did you make any sacrifices?

We spoke about going away for three weeks to somewhere Australia, but we thought – it's going to cost £2,000 each and we can put that towards the house now rather than waiting a few extra months.

How does it feel to be a home owner?

It feels strange. It does feel quite a lot of responsibility – I didn't realise how much. Things taking out mortgage protection. Our friends call it “adulting hard”. They're renting and not really thinking about owning a place and they're “wow, you've bought a house”.

Reaction from friends?

Lots of people think it's really good, other people say they're nowhere near that stage. I don't know if they're thinking I'm growing up too fast. It's generally been positive. I don't know anyone who has done it without a partner, so I think it would be difficult to do it on your own.

Image copyright Andrew Douglas Image caption Andrew and Kirsty bought their home with a 15% deposit

What if you need to move?

With a big move we might give it a trial, and rent out this house while we lived somewhere else.

Should more young people be able to buy a home?

I do think people complain they can't afford to buy a house but they go out every weekend, they smoke or they eat out all the time.

But property prices have also shot up in the last 20 years with more people buying second homes. There are also people who don't want to have the responsibility.

I think it's good that the government is helping with Help to Buy schemes and it needs to do more to help first-time buyers.

Rebecca and Adam

Image copyright Rebecca Thompson Image caption Rebecca bought a three-bedroom home with her boyfriend Adam in Irlam, Greater Manchester

Name: Rebecca Thompson, aged 23. An information analyst on £21,900 a year.

Lives with: Adam Drinkwater, aged 25. A bank administrator on £16,500 a year.

Location: Irlam, Greater Manchester

House price: £126,500 for a three-bedroom semi-detached house

Deposit: £6,300 (5%) with the Help to Buy mortgage scheme and Isa

Why buy a property?

We lived in a rental flat together for 18 months and realised that the amount we were paying in rent was more or less the same as we would be paying with a mortgage. When we were renting there were a lot of things we couldn't do, decorate or move anything around.

How did you do it?

It was difficult. I was working part-time in my final year at university so I saved my entire wage and lived off my student loan, which wasn't much. We didn't go on holiday that year and saved as much as we could.

Image copyright Rebecca Thompson Image caption Their home cost £126,500 with a 5% deposit

Did you make any sacrifices?

We came straight from university, where you're living on a bit of a shoe-string anyway, so we probably sacrificed but not realised, because we've not been enjoying the extra income we've had since graduating. We would have probably gone on some more holidays or gone out more and probably bought a few more clothes.

How does it feel to be a home owner?

It's brilliant. I feel it's a really secure base while I'm going on to develop my career. It's one less thing. A lot of people are aiming towards saving a deposit while I've got past it.

What if you need to move?

It would be really difficult, and it's definitely an attraction for staying where I am. In my career there are a lot of opportunities down south, but I wouldn't want to entertain it because of the house prices. It would take us five times longer to save up a deposit, and the amount of income you need to get for a mortgage is totally unobtainable for the average graduate.

Image copyright Rebecca Thompson Image caption Rebecca says there needs to be more affordable housing

Reaction from friends?

Some live in a more expensive area and I think they were surprised. It's not something that's on a lot of people's radar, owning a home at this age. Particularly if you're not in a relationship, I don't think it is affordable.

Should more young people be able to buy a home?

I think cultures have changed a bit. When my parents were growing up, their parents drilled into them 'sort yourself a house, get married and that's when your life begins'.

Now there's not as much of an emphasis. I think homes do need to be more affordable.

It's silly that the town where we live in, a lot people can afford to buy – whereas only as far south as Birmingham no-one can afford to buy a house earning what we do.

First-time buyers: The numbers

  • The average age of a first-time buyer in the UK is 30, says lender Halifax
  • The deposit paid by first-time buyers was on average more than 20% of the property price in 2014
  • The cost of a home for a first-time buyer was 4.5 times their annual income in 2014
  • The median income for a first-time buyer household in England was £43,000 in 2014/15 – £16,000 more than all households
  • Nearly a third had help from friends and family for their deposit
  • The average price of a UK home was £217,928 in November 2016 – 6.7% higher than the previous year

Source: ONS, Department for Communities and Local Government, Land Registry

Where can I afford to live?

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The sad reality behind the Sterling First scandal

For A Young Couple That Have To Sell Their Home

They come from a different generation, where your handshake was as good as your word.

Many of them are unwell — indeed, several of them are dying — as they struggle with the sobering reality that they have lost everything in a scheme some say could have been avoided if authorities acted sooner. Common denominators of the 101 known victims of the collapse of the Sterling First lease group are emerging; elderly, financially vulnerable and trustworthy to a fault.

A supermarket worker, a truck driver, a widower who ran a corner deli. Ordinary West Australians who had saved and scraped to enjoy retirement and a bit of financial security for a few years at the end of their lives.

They handed over sums from $117,000 to $365,000 to Sterling First so they would not have to pay any bills until they died. What was left over would go to the kids.

Now many of them are facing eviction or moving homes they have renovated but do not own. Mostly in their 70s and 80s, they are confused as to how they ended up in this situation. They are in tears as they tell you they now have nothing and nowhere to turn.

They are good, decent people who have lost everything. Up to $24 million invested in Sterling First group of companies has gone.

These are their stories.

Margaret Kennedy

Having been fleeced of her life savings in the Sterling First scandal — and coping with Stage 4 breast cancer spreading to a lung — Margaret Kennedy bravely ploughs on.

But it does not take long before the sprightly 80-year-old Yanchep resident is overwhelmed by the realities of the nightmare in which she has awoken to.

“I was told I was paying for 40 years rent when I handed over my money and signed the contract,” she said. “But that money’s gone, along with the people I gave it to, and now I have to pay even more rent for the house I thought I had for 40 years.

“I’ve already heard of people me caught up in all this living in cars, mainly because they haven’t got anywhere to go, well I could be next. I’m just not sure what to do.

Margaret Kennedy is one of more than 100 West Australians who have lost their life savings in a scam that could have major repercussions throughout political and financial circles.Picture: Ross Swanborough/ The West Australian

“Maybe we should pitch some tents outside Parliament House,” she joked half-heartedly.

Her story is a familiar one among the many victims of Sterling First and the complex web of associated companies that have gone bust. ASIC is now investigating the collapse.

Margaret handed over $117,000 in February after being told that if she dropped $60,000 from the price of her Marangaroo home and sold it quickly, Sterling First would cut by the same amount the cost of the home she could live in.

Needless to say, her family home of 32 years sold swiftly. After paying off her mortgage and “every single bill I have ever had”, she signed a contract that she thought would give her the security of living rent-free for the rest of her days.

She went ahead and spent $5000 on alterations to the house which she is now waiting to be evicted from. Of the money she had from the sale of her home, she has a few dollars left.

She cannot afford to pay the $280 a week rent to stay in the Mullins Street house.

“That’s what I gave them the money for, it’s written on the contract, but that obviously doesn’t mean anything anymore.”

Graeme Sofield, 67 and wife Sheryl, 65

The Sofields lost everything and now have to rely on their children to pay their rent.

They too saw a newspaper ad and started investigating. They forgot about it, but when Graeme retired as a branch manager for Coates Hire, they thought they would join some of their friends and go into a Sterling property at Ravenswood.

They sold their house in Secret Harbour and with the little equity they had, they handed it all over to Sterling — $135,000 and a $11,000 “set up” fee.

After feeling uneasy about the original deal, they took advice from friends who suggested they get the contract — as they were told they could — and in August last year, gave Sterling six months’ notice.

They were assured they would get their money back in February this year. They have not.

“We feel sick and somewhat embarrassed, to be honest, and we are relying on our kids to pay our rent at a stage of life when we are supposed to be helping them.”

Joe is a tradie

Joe worked for two years as a FIFO worker to get enough money for his first investment property.

With a 14-month-old baby and a young wife, the 28-year-old spent just over $200,000 to buy a house that, in turn, was tenanted out by Sterling Corporate Services, who sublet it to one of their clients.

As a property owner, he is stuck in the middle, because he is now paying two mortgages — one that’s servicing the home he lives in with his family, and the one in Sterling First which is now not bringing in any rent because the tenants are broke.

I worked my guts out to get ahead

“I worked my guts out to get ahead,” he said. “I’m trying to claim insurance so I can cover the mortgage, but I can’t do that until the tenant is evicted.

“As terrible it is for people who are much older than me and in that terrible situation; there are other people much younger, me, who have been stung too.”

Gwen Standley, 77

Gwen sold the family home in 2016 and moved just around the corner to a Sterling First property in Hamilton Hill.

Her husband, Ray, died 10 years earlier and she thought it was time to sell the family home they built in 1966 and move into something smaller and manageable.

Sterling representatives courted her and after the sale went through on the $315,000 property, she received some flowers and a bottle of bubbly. “I haven’t seen or heard of them since”.

“I did it because I was told it would be safe for 40 years and I made sure I did my homework and everything seemed to be fine,” she said.

“I looked at retirement villages and all that and it just didn’t seem right. The first couple of years it was wonderful . . . now all this.”

She said her biggest fear was keeping a roof over her head.

“It’s the last position I want to be in at my age,” she said. “I know my son has a caravan which I suppose I can stay in, but I’m not sure what to do with all my furniture.”

She said she hoped to get about 10 per cent of her money back.

Laurie and Louise

Laurie is a retired supermarket worker who sunk his life savings into Sterling First. He went to a public seminar with the company in November 2016 when they were spruiking their lease plans.

He had a few heart problems and realised it was time to retire. They looked at retirement villages but did not that idea — so they took the plunge.

They moved into the Harrisdale home, just south of Canning Vale, on which they secured a 40-year lease on July in 2017 for $240,000 and spent $10,000 making it “their” home. They have been chasing company representatives for about six months over various issues but never received a return call.

“We did keep a little aside for our funerals, so that’s something, I suppose.”

We did keep a little aside for our funerals, so that’s something, I suppose.

David and Maria, both in their late 70s

David is a former lecturer and teacher in accounting. He is also a cancer survivor. His wife, Maria has terminal lung cancer.

They moved from a Mandurah retirement village into a Sterling First home in mid-2016. He spent his entire life savings making the move, spending more than $160,000 on a 20-year plus 20-year lease. They were encouraged to spend money on “their” home in Mandurah.

Everything was going fine until an ASIC investigator turned up unannounced in the middle of last year and grilled them over their contract with Sterling First.

“We were surprised, to say the least, but after we received some letters from Sterling First saying there was nothing to worry about, we were put at ease and sort of moved on,” he said. “Then news that they were put into administration a couple of weeks ago shocked us. I’ve been attending meetings but it doesn’t look good.”

“He said he was now “ruined”. He put his entire life savings into the venture. Although he knows that he does not own the home he is in, he just cannot bring himself to move out — especially now that Maria is so unwell.”

“I’m not moving until they have to kick us out, we haven’t got any choice at the moment.”

Gordon and Freda Stevens, both in their 80s

A retired engineer from Liverpool who moved to Australia in 1998, Gordon was proud of the fact that he was a self-funded retiree.

No more. He is now on the pension and faces eviction from a house he does not own.

With his frail wife, he is at wits end with nowhere to turn.

He is waiting for a meeting next week with consumer advocate Denise Brailey to see what action can be taken.

He has lost the lot. All $272,000 of it.

His contract is typical of the other dodgy agreements. A 40-year rent-free lease on a house that someone else owns.

In addition, an escape clause that “guarantees” that the Stevens can get the deal anytime they want.

Gordon now knows it’s a contract not worth the paper it’s written on.

“And now the owner of our house wants $1900 a month, which we just haven’t got. I just don’t know what to do.”

Allan Barrett, 68, and his partner Diana, 67

Lost $315,000 in the Sterling First property deal and a further $10,000 in a company share plan that never got off the ground.

They heard about the outfit when they saw some advertising in a local newspaper in 2016. They wanted to downsize and thought the concept of 40-year leases on numerous houses would be “a good fit”.

Sterling First victims Allen and Diana BarrettPicture: Supplied

One of the attractions was the promise of no exit fees and having investigated lifestyle villages they decided to go with Sterling to give them more independent living.

They sold their house at Munster and passed over the $325,000 in 2017 for a 40-year lease on a house at Hamilton Hill.

Following the collapse of the string of companies associated with Sterling First, the couple have lost everything. They have reluctantly put their names down on the Department of Housing waiting list. “We just fall into bed every night exhausted . . this is a nightmare.”

Colin Price, 78, and his partner Diana, 78

They sold their house in Merriwa after Colin had suffered a series of heart attacks. Knowing his life expectancy was definitely not going to go beyond 40 years, they settled on an option in Greenfields and handed over $168,000 after quickly selling their house.

“We looked at it and everything seemed above board. We did get advice from various people and even they said it seemed reasonable,” Colin said. “They all seemed very helpful and they encouraged us to spend money on the house to make it our own, which we did. We checked out Sterling’s offices in South Perth and they all seemed legitimate.”

Colin said a company representative suggested in 2018 that the couple invest another $75,000 in shares because Sterling was going to be listed on the ASX come December that year or January 2019.

The company said the listing had the backing of two big Singapore fund managers. Colin wanted to invest but Diana was not as enthusiastic.

Sterling First victims Colin and Diana Pricehanded over $168,000 after selling their house to fund their future.Picture: Supplied

She refused to put any of her superannuation into the share deal and “thank Heavens for that” said Colin.

The retired sales representative says he is ashamed at how he was “taken for a ride” but he has concerns that are more pressing; he may have to find somewhere to live.

“It’s all in the hands of our solicitors and we are not as badly off as many others, but we were hoping to be able to leave something for our children when we go, and now that dream is drastically shattered.”

Cindy King

Cindy King is the daughter of Tracey and Rod King.

The couple are in their late 50s. He is a retired mechanic with diabetes and they put their life savings — more than $200,000 — into a rented house in Baldivis.

They were told that they would have it for 20 years, and for that money, they would not have to pay rent or charges.

Cindy said they were told to make the place their home, and they added a patio and made it as comfortable as possible.

“They never had a lot of money,” Cindy said, “so they were so looking forward to it”.

She said her parents thought something was wrong when they could not get in touch with anyone from the company to discuss various issues for the better part of 18 months.
Sterling First victims Tracey and Rod KingPicture: Supplied

Then on Easter Friday, $81,000 went missing from the Sterling Income Trust Fund — and no-one could explain why.

“No one would talk to us, clearly those bastards had ripped us off, and my parents didn’t know where to turn. No-one was helping us.

“My parents have always been strong people, they’ve had their fair share of hard knocks, but this is the first time I have ever seen my Dad cry.

“I was worried they were suicidal, and that’s when I said, ‘come on, you’re coming into my home’.”

The pair will move into a caravan at the back of Cindy’s Homeswest home in Rockingham in the next week.

They would have been in earlier but they decided to stick around to make sure the house is clean for whoever takes it over.

“That’s just the sort of people they are,” Cindy said.

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