So what does rent to buy mean and how does rent to buy work? Basically, this gives you the opportunity to rent a home at 80% of the market rent for up to 5 years.
Rent to Buy scheme, what is it?
So who is the rent to buy scheme aimed at? Well, it aimed at those who are either first time buyers or people that have previously owned a home and for one reason or another can’t afford to get on the housing ladder again. You do need to meet a certain level of criteria such as having a good credit history and have a household income of less than £60,ooo per annum (excluding London where you need to earn less than £64,300). So it could be a single person or a couple looking for a way to buy a home.
Housing Associations have rent to buy properties
Housing Associations are the ones who have these rent to buy properties available. We’ve mentioned about the general levels of criteria you need to meet. This may differ depending on the Housing Association that’s running the rent to buy scheme.
How does the rent to buy work?
The rationale for offering these properties initially for rent at 20% below the market rent rate is to give you the opportunity to save for a deposit with the remainder you may have had to use if you were renting in the open market. So for example, if you are renting one of these homes for £400 per month it should leave you with around £100 to save. This is because if you were renting a similar sort of property privately then it would probably cost £500 per month. This is based on the rental benchmarking that will have taken place before marketing the homes for rent.
Housing Associations as Social Landlords are responsible for rent to buy
The rent to buy scheme may be a new concept to you. However, renting from a Housing Association should at least give you reassurance about the landlord and their responsibilities to you. There are pros and cons with rent to buy. On the plus side it gives you the chance to go after property you may not normally have been able to afford. On the downside if house prices rise, when you do decide that you are wanting to buy a share of the property it may have got beyond your reach.
Graduate from rent to buy to shared ownership
As with all these schemes you need to carefully read the small print and understand if it is right for you. However, it certainly is food for thought if you are looking at a cost effective way to get on the property ladder. Should you decide to go with the rent to buy scheme it gives you the opportunity to purchase part of the home on a shared ownership basis.
As I have mentioned in a previous post, once you are on a shared ownership scheme you will end up part owning and part renting your home. There are opportunities to buy more of the home at a later date up to the point where you have 100% ownership. Like I have mentioned before it’s important first to understand how rent to buy works and how shared ownership will work once you have decided to buy a share of your home.
Find Rent to Buy properties that are listed on MovingSoon.