What you need to know about the Rent to Buy scheme
This government scheme is designed to make it easier for those transitioning from renting a property to buying one. It is hoped that first time buyers, who are currently struggling to get onto the property ladder, could pay a lower rent which is subsidized for a period of time. When this time is over, they will then have the option to buy the property or enter into a shared ownership scheme. Here is how the scheme works:
Properties available through the scheme tend to be new builds and starter homes are being offered at approximately 80% less than the local average. The period of rental can vary but is usually for five years. Once the rental period is up, the tenant can choose whether to buy the property outright or enter into a shared ownership agreement with the housing association offering the lease.
The main benefit of this type of scheme is that during the rental period, the tenant has the chance to raise some money towards purchasing the property because the rent payments are lower than normal. A potential disadvantage is if house prices rise considerably in the area, the amount to be paid will be higher.
The scheme is available for those looking to buy for the first time and anyone who previously owned a property but can no longer afford to buy one. All that is required is a fairly good credit score and a household income of less than 60,000 per annum.
Should the tenant be unable to buy the property after the rental period, shared ownership is a further possibility. This option provides the opportunity to buy between a quarter and two-thirds of the property, while renting the rest back to the housing association at a reduced price. As time progresses, it is normal for the amount owned to increase as well. For help with Conveyancing Quotes, visit a site like www.samconveyancing.co.uk/conveyancing-quote
When the rental period comes to an end, the tenant will be assessed on their eligibility and affordability for purchasing a share of the property. For those who haveexperienced a change in their circumstances and who are not able to buy, it is usual for the landlord to review the existing tenancy agreement and there is no guarantee that the tenancy will be renewed.
For information on what’s available in your local area, contact your local housing association. There are other government schemes to help first time buyers, including the council home right to buy scheme, help to buy and shared ownership schemes.