A guide to Rent to Buy
With the cost of living increasing and house prices continuing to rocket, it’s a tricky time for would-be first-time buyers.
Those wanting to buy their first home face having to save up ever-increasing deposits, whilst day-to-day bills go through the roof. Yet for many, home-buying remains the dream. As a removal company in Leeds we get to see the sheer happiness of someone taking ownership of the keys to their very own front door, so we definitely see why.
Saving a deposit whilst also paying high rental costs is one of the things holding many people back. But there are schemes out there aimed at helping people get a foot on the property ladder.
What is Rent to Buy?
Rent to Buy is a government scheme which is aimed at helping people eventually be able to buy the property they first rent. It’s run by housing associations and covers selected new build properties. In England (check the rules for Scotland, Northern Ireland and Wales as they vary), it allows you to rent a property at below market value to enable you to save up the deposit needed to buy the property.
You can apply to rent to buy as a working household. You need not to own a property or currently be able to buy one on the open market, have a good credit history and be aiming to buy within the next five years. During that time you’ll typically pay at least 20% less rent than you would on a standard rental property, so you can save up the difference.
At the end of the five years, there are several options. If you need more time to save, the landlord may agree to extend the rental. You have first refusal on the option to buy the home, if the landlord wishes to sell, but there is no obligation to buy it. Or the landlord may decide to convert the property into a standard rental. Shared Ownership may also be a possibility – where you own a percentage of the home (say 25%) and continue to rent the remainder.
What are the potential advantages of Rent to Buy?
- Renting at below market value allows you the opportunity to save up a deposit you may not otherwise be able to save for.
- It may give you access to new build properties you couldn’t otherwise afford.
- As this is a long term commitment, it enables you to become part of a community and really settle into a home.
What are the possible disadvantages?
- Your choice of properties will be limited to those eligible for the rent to buy scheme.
- There may be specific requirements from specific housing associations, so check the details carefully.
- It’s important to remember that the price the property will be sold at is market value at that time – not at the point you started renting. So be aware the purchase price is likely to increase as time goes on. This may alter the amount you need to save.
- As this is a long term option, you need to make sure the property will still suit your needs in say five years – although you’re not tied in to buying the property if you no longer want to.
More details for the North of England, including Leeds and Yorkshire, can be found here: https://www.helptobuyagent1.org.uk/
← Five ways to secure the house of your dreams in a competitive property market The best places for first time buyers in Leeds →