Rent to Buy Scheme | What is it and how can it help you?
First-time buyers continue to struggle to get on the property ladder because they can’t afford the cash deposit. However, under a new Rent to Buy Scheme, they are guaranteed seven years of fixed subsidised rent giving them time to save for a deposit.
What is the Rent to Buy Scheme
Rent to Buy is a £400 million programme launched by the government amid mounting concerns over how long it takes young people to raise the deposit for their first home. The aim is to allow aspiring homeowners to rent new homes at a discounted rate, save for a deposit and then buy the home they’ve been renting, or a different home, later on.
How will it work?
* Between January 2015 and March 21 2017, housing associations and social landlords will bid for a share of £400 million to build 10,000 new homes for young workers. As an incentive, the landlords will have up to 16 years to pay back the low-cost loans
* Most of the properties will be one or two bedroom houses and apartments
* Half of the loans are earmarked for London and the other half for the rest of England
* Young people can rent these properties at a fixed rent 20% below the market value for seven years; then have an opportunity to buy the home
* At the end of the seven years, they don’t have to buy that property if they don’t want to; they can move out and buy a different property, or rent another property
Who is eligible?
The scheme is aimed at hardworking people who can’t get a mortgage because they are finding it impossible to raise the cash deposit, rather than those on benefit. The scheme is available to:
* First-time buyers
* People who once owned a home, but are can’t afford to buy one now on the open market
* Households earning no more than £66,000 a year combined (or £64,300 for homes in London). A household could be a single person earning £33,000 a year or less or a couple or two friends
* People with a good credit history
Are there any pitfalls?
* The scheme may give young people a springboard onto the property ladder. However, the long period of rental may mean that if house prices rise during that time, they may still be too expensive to buy. If tenants can’t afford to buy at the end of the seven-year period, they could buy a part of the property under a Shared Ownership Scheme if that is offered
* Housing associations and other landlords who make successful bids for a share of the £400 million low cost loan pot will set their own eligibility criteria for tenants. This may mean them giving priority to existing housing association tenants and council tenants.
Landlords are bidding for loans and building properties as this article goes to print, so keep looking out for more information. If you are moving house hold contents into your new property and looking for removals company let us provide you hassle free removals experience.