by Mark Johnston
Rent to Buy Scheme.
With home ownership out of reach for many people the ‘rent to buy’ scheme could potential help, it was introduced at the height of the credit crunch and has already helped many on to the housing ladder by converting their rented home into their own home.
The ‘rent to buy’ scheme offers an opportunity for buyers to purchase a property either outright or on a shared ownership basis after a fixed period.
The schemes allow buyers to pay a reduced rent on a new home so they can save money for a deposit to buy a share of it later.
‘Rent to buy;’ covers certain newly built homes acrossEnglandand is provided through ‘homebuy agents’. It is open to households who earn £60,000 or less a year and to people who currently rent council or housing association properties or first time buyers. Therefore the scheme has very limited availability.
Some housing associations offer variations of ‘Rent to Buy’. Some of these schemes are marketed with different names, for example ‘Try Before You Buy’ or ‘Rent Save Buy’.
Yvette Ruggins, chair of the National Housing Federation’s Home Ownership Advisory Panel says “Rent to HomeBuy still exists and some housing associations are more proactive than others in offering it – it really depends on availability in their schemes and what their views are”.
Homes are available through a range of housing associations on assured shorthold tenancies with an affordable rent of 80 per cent or less of market rents.
The rent is payable for a pre-defined and limited period, usually between 3 to 5 years after which time there is an expectation that you will purchase the property.
This means that the buyer is able to move in to the property straight away and treat the home as their own from the start meaning they could make alterations to the property, with in reason.
The rental period provides the opportunity to save for a deposit which then enables access mortgage availability.
At the end of the rental period, the buyer is then assessed to determine their eligibility in purchasing the property.
If circumstances have changed and they are no longer able to afford to buy, the landlord may review the tenancy.
Buyers are never tied in to purchasing the property so for instance if one partner lost their income and found themselves out of work and therefore unable to buy the property they could just walk away at the end of the rental period and have nothing else to pay.
It is worth remembering however that until the rental period is up it is essential that monthly rent payments are made as failure to ensure this could mean losing the right to purchase the property, losing potential equity in the property from any alterations made or eviction from the property.
It is not just affordable housing that has embraced the Rent to buy model. Developers and private vendors are also recognising the potential of a Rent to Buy-style scheme to attract tenants who get to try before they buy.
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