Rent to Buy
What is Rent to Buy?
Like a perfume bought at a department store, Rent to Buy is a ‘try before you buy’ style of home buying. It is a government scheme that lets first-time buyers rent a property before they buy it outright.
How does Rent to Buy work?
Through Rent to Buy, first-time buyers can pay subsidised rent on the home they live in for up to five years. After a set period (usually around two years), tenants can either buy the property or enter a Shared Ownership deal. If you do decide that the house is worth buying, depending on your terms, you will gain 25% of the rent you paid, and 50% of any increase in the property’s value.
Is it better to Rent or Buy?
The eternal question. The renting vs buying debate ultimately comes down to your circumstances. A first-time buyer will find it much easier to rent a house, which doesn’t require a huge deposit. This makes Rent to Buy the perfect solution for someone who wants a home but doesn’t have the money to buy one straight away.
What is the Rent to Buy eligibility criteria?
Before applying for a property, it's important to make sure you meet the eligibility criteria outlined below:
- Employment Status: Applicants must be part of a working household at the time of application.
- Property Ownership: Individuals who already own another property are ineligible for Rent to Buy schemes.
- Financial History: A clean credit history, without any instances of bad debts or County Court Judgements, is essential.
- Additional Criteria: Certain developments might impose extra requirements, like giving priority to residents or employees in the local community.
First Homes Scheme
What is the First Homes Scheme?
The government-backed First Homes scheme is designed to empower eligible first-time buyers with substantial discounts of 30% to 50% on new build homes.
Initially unveiled in February 2020, this initiative grants residents in England the chance to secure a home in their local community at a price significantly below market rates.
What is the eligibility criteria for First Homes Scheme?
The First Homes scheme targets individuals in high-demand areas, offering a lifeline to those otherwise unable to afford local homeownership. Eligible participants must meet specific criteria, including:
- Age requirement of at least 18 years.
- Household income not exceeding £80,000 (£90,000 in London).
- First-time buyer status, without prior homeownership in the UK or abroad.
- Ability to secure a mortgage covering at least half the home's price.
How does the First Homes Scheme work?
The First Homes Scheme enables first time buyers to access discounts on their first home. Each property undergoes valuation by an independent surveyor to ensure the discount aligns with prevailing market values. Properties under this scheme cannot exceed £250,000 in value, or £420,000 in London, after discount application.
Alternative Home Buyer Schemes
Deposit Unlock
Unlock homeownership with Deposit Unlock, a scheme by participating developers. Buyers secure a new build property with a 5% deposit, as the home builder insures the mortgage, enabling better Loan-to-Value mortgages from lenders.
Discount Market Sale
Discount Market Sale offers a solution for low and middle-income earners, looking to buy in the borough they live or work in. Purchase a new build property at a discounted price, typically around 20%, making homeownership more attainable.
Discount Full Ownership
Discount Full Ownership scheme allows buyers in London to purchase 100% of a property at a discounted rate of at least 20% compared to local market prices.
Intermediate Rent
Planning to save for a deposit and buy a property within five years? Intermediate Rent offers a helping hand. Rent a new or refurbished home at a subsidised rate through this scheme, giving you the flexibility to save for your dream home while enjoying comfortable living.
London Living Rent
London Living Rent offers a lifeline for those seeking affordable housing in London. Rent a home at below-market value rent under tenancies of minimum three years, with the option to purchase the property on a Shared Ownership basis during the tenancy.
Lifetime ISA
What is a lifetime ISA?
A lifetime ISA (individual savings account) is a government scheme which by first time buyers can benefit from. It can also be withdrawn if you are 60 or over.
How does a lifetime ISA work?
Put up to £4,000 per year (£333.33 per month) into the lifetime ISA, and the government will add a 25% bonus per year, up to the value of £1,000. In order to be eligible to use a lifetime ISA after 12 months, the first home must be under £450,000 and bought with a mortgage. A solicitor then instructs the ISA provider, who pay the funds directly.
