How does the Rent to Buy scheme work?
Saving for a deposit in order to get on the property ladder can be particularly difficult when faced with a monthly rent. Some housing associations and registered providers offer properties for intermediate rent, which equates to around 80% of the market rent level. Although such properties are not available to buy, the scheme allows tenants to save for a deposit by paying less rent than they would otherwise outside the scheme.
The provider would discuss your savings plan with you at the outset and how they will regularly review your progress to help ensure that you are still on track and eligible for the purchase. Once you have saved enough money, you can then buy your rented home outright or buy a share via the Shared Ownership scheme.
However, if you do not exercise your option to buy within the agreed timeframe, you will have to leave at the end of the tenancy period. In this case, you can use your savings as a deposit to buy another property independent from the Rent to Buy scheme.
Do I qualify for the Rent to Buy scheme?
In order to qualify,
- your household income cannot exceed £60,000 to £80,000 per annum (dependent on your location),
- your circumstances must be such that you would not be able to buy a suitable home without assistance,
- you cannot be the owner of a property or will have sold by the time the tenancy starts (some providers require that you are a first time buyer), and
- you cannot have outstanding credit issues.
In addition to the above criteria, priority may be given to military personnel or those who live or work in the area.