Do you dream of having your own place to call home but are struggling to save for a mortgage deposit while paying high private rent?
Rent to Buy is a scheme that has been introduced to help you on your journey to home ownership.
Rent to Buy allows you to move into your new property straight away and pay a reduced rent, giving you extra time – and money – to save towards your mortgage deposit.
Rent to Buy explained
With Rent to Buy, you can move into your new home now, renting the property on an Assured Shorthold Tenancy basis for a period of five years. During this time, you’ll pay a reduced rent of just 80 percent of the full open market rent value. You can purchase your home from us on a Shared Ownership basis during years one to five, or on an outright basis at the end of the five-year term.
What are the benefits of Rent to Buy?
You’re able to move into your new home and save towards purchasing the property.
You’ll pay a reduced rent on the property – 20 percent less than the market rent.
You’ll receive financial assistance to help you work towards home ownership within five years or less.
You can settle into your new surroundings knowing that you’ll be able to buy the home you’re renting.
Who can apply for Rent to Buy?
To be eligible for Rent to Buy, you’ll need to be in a working household. This means at least one person is employed and in a position to secure a mortgage.
It's designed for first-time buyers or for those applicants who've exceptional circumstances, such as the break-up of a relationship, which means they can’t currently afford to buy a property outright on the open market.
Applicants will be assessed to ensure that they’re eligible for the scheme and that they can’t currently afford to buy a home on the open market.
You can’t apply if you already own another property, either in this county or aboard.
Eligibility requirements
All applicants applying for Rent to Buy will be financially assessed and required to enter into a Rent to Buy Option Agreement, confirming their intentions to use the benefit of the five-year reduced rent period to help them save towards a mortgage deposit.
This'll be monitored and assessed on a yearly basis throughout the five-year term.
To abide by the statutory requirements for renting property in the UK, all applicants over the age of 18 will be subject to the following checks:
A Right to Rent check and fraud prevention checks to confirm that you have a legal right to rent a property in the UK. You'll need to provide valid proof of your current address and photographic ID.
An employment reference and confirmation of the monthly household income.
Credit referencing to confirm that you have an adequate credit score to obtain a mortgage during the five-year period to purchase the property. Please be aware that we'll be unable to proceed with your application if you’re subject to any Bankruptcy or County Court Judgements (CCJs) or any other adverse credit that would result in a credit reference failure. We're unable to accept applications where a rent guarantor is required.
Evidence that advice has been sought from a Mortgage Advisor that you'll be able to secure a mortgage within the five year period.
A reference from your current landlord or letting agency (if applicable).
Please note that these are likely to be carried out by a letting agent acting on our behalf. There will be no cost to you for these checks. We're unable to proceed with applications that fail any element of the required eligibility checks listed above.
Allocation of properties
On some of our new-build housing developments, there are requirements stipulated at the planning stage which give priority to applicants who live and work close by.
Our appointed letting agent will advise you if this is applicable and provide further details. There may be a requirement to provide further information to support your application, should this be the case.
There are no restrictions on what property size you can apply for under Rent to Buy. However, we'll use our discretion during the application process to ensure that properties are allocated appropriately – based on the number of intended occupants – should there be multiple applications for each development.
Agreements, payments and deposit
The tenancy agreement
You'll be required to enter into an Assured Shorthold Tenancy Agreement, which'll run on a periodic basis.
The tenancy agreement will be fixed for the first six months and you'll be unable to serve notice to end your tenancy during this period.
The tenancy agreement will need to be signed by both parties before you move into your home. You'll be provided with a copy of the agreement during the application process to give you time to read and understand the commitment you're entering in to. Our appointed letting agent will be happy to answer any general questions you may have.
The tenancy agreement will set out the responsibilities of both us as your landlord and yourself as our customer. This'll include your liability for ongoing rent payments and the upkeep of the property. It'll also outline when you may need to contact us, for example, if you need to gain consent to keep pets, alter the property (including decorating) or if there's any change to the household details.
The tenancy agreement is a legally binding contract between yourself and your landlord. It's important to remember that any breach of the agreement could lead to further action being taken to end the tenancy.
The option agreement
You'll be required to a sign a Rent to Buy Option Agreement, along with your tenancy agreement, before you move into your home. The Option Agreement sets out the terms and conditions should you decide to purchase the property either during or at the end of the five-year rental period.
There may be certain circumstances which may result in us being unable to sell the property to you at the end of the five-year period, such as if there have been any breaches in the terms of the tenancy agreement.
Rental and service charge payments
The rental amount is set at 80 percent of the current open market rental value, including any service charge payments (if applicable). Rent and service charge payments are reviewed annually on 1 April.
These will be calculated in line with the details stipulated within your tenancy agreement and will be checked to ensure that they don't exceed 80 percent of the open market value.
Rent payments will be collected on a monthly basis on the first of each month by direct debit.
Renting privately on the open market
Rent to Buy scheme
Rental value 100%
Rental value80%
Rent (pcm) £700
Rent (pcm) £560
Monthly saving £140
PCM = Per Calendar Month
This is an illustration to show how Rent to Buy’s rents are calculated and should not be relied upon for affordability purposes, or as confirmation of actual Rent to Buy rents.
Security deposit
A security deposit will be payable prior to you moving into your home, which is calculated at five weeks’ rent, including any service charge. The deposit will be held in a protected Tenant's Deposit Scheme and you'll be provided with the details of the scheme and all relevant information by our appointed letting agent.
When you move into your home, our appointed letting agent will arrange and undertake a full handover inspection with you, during which an inventory will be completed and photographs will be taken.
The inventory will be relied upon should you move out of the property and a check out inspection is required. Should any damage or issues be identified, over and above general wear and tear, the costs will be deductible from the security deposit, along with any rent and service charge arrears.
If you proceed to purchase your property, the security deposit will be returned to you in full within 14 working days of completion.
Applicants returning to the market due to exceptional circumstances, such as a relationship breakdown, which means that they can’t afford to buy a home on the open market.
Applicants must be ‘working households’ and intend to buy their own home in the future at time of letting.
All applicants will be required to complete an application and be assessed to ensure that they are suitable for the scheme and that they cannot currently afford to buy outright on the open market. Applicants will be subject to affordability, Right to Rent, Credit References and Landlords checks.
You'll be required to pay a full month’s rent including any service charge, plus the remaining apportionment for the current month’s rent before you move in to the property. This'll allow time for your account and future direct debit payments to be set up.
The security deposit payment is equivalent to five weeks’ rent/service charge and will be payable at the same time. Payment will need to be cleared at least 48 hours prior to you moving in to your home.
Once a moving-in date has been set, our appointed letting agent will advise you of the amount you need to pay and arrange to collect the payment from you on our behalf.
All future payments will then be collected directly by us via a monthly direct debit on the first of each calendar month.
A service charge is the payment collected to cover any external or internal communal costs, such as gardening, external/internal lighting, pavement/road repairs.
Should a service charge be payable for your property, you'll be provided with a breakdown of the works included in the costs. Your rent will be calculated to ensure that the rent including any service charge does not exceed 80 percent of the open market rent.
You'll need to pay the service charge while you're our customer. The service charge will also be payable once you purchase your home on either a freehold or shared ownership basis and we'll provide you with an up-to- date schedule at that time.
In addition to your rent payments, you'll also be responsible for all utilities costs associated with the property from the day you move in. Meter readings will be taken at the handover meeting to allow for you to set up accounts in your name.
You'll also be responsible for Council Tax and any telephone, Wi-Fi and TV subscriptions.
An Assured Shorthold Tenancy will be granted, which'll run on a periodic basis for a maximum period of five years. The agreement will be fixed for the first six months.
Only applicants approved for Rent to Buy and included in the application can live in the property. Sub-letting is not permitted within the terms of the tenancy agreement. You must notify us of any change to the household details during the tenancy period.
If you'd like to carry out decorating or works to the property, you'll also need to notify us beforehand in writing.
We would, however, request that due to the properties being newly built and settling, you refrain from hanging wallpaper and decorating the walls as this may affect the defects period stipulated by the builder and may cause issues when the end of defects inspections are carried out.
As your landlord, we're responsible for maintaining the property under the terms of the tenancy agreement. When you move into your home, you'll be provided with a handover pack, which'll include instructions on how to report a repair or property defect to us.
You also have your own responsibilities within the tenancy agreement to keep the property in good order. We won't be held responsible for costs relating to damage caused to the property by customers or visitors. These costs will be deducted from the security deposit at the end of the five-year term, or sooner should you vacate the property during the five-year term.
Once you move into your home, you’ll be provided with a handover pack which should provide all the information you require. You’ll also be given access to set up a ‘My Account’ profile.
My Account allows you to check your personal information, your rent statements and also report repairs. You can also request help and information and report any anti-social behaviour issues through our website. You’ll also be given information about your local Housing Officer, who’ll also be able to provide help and advice when required.
Firstly, a valuation by a RICS Chartered Surveyor will be required. We'll arrange for the valuation to be undertaken on your behalf and we'll cover the cost. The valuation will confirm the current open market valuation of the property.
If you live in a house, you'll be able to buy the freehold of the property. If your home is an apartment, the property will be sold on a leasehold basis and a lease will be granted.
Should you proceed to buy your home, we'll require an Agreement in Principal (AIP) from your mortgage lender, confirming that you’re able to secure a mortgage.
Under the terms of the Option Agreement, prior to the end of the five-year term we may agree to sell a share in the property to you on a Shared Ownership basis (subject to further eligibility and affordability checks being undertaken). You'll not be able to purchase your home outright until the end of the five-year term.
If you decide not to purchase the property or are unable to purchase the property due to your current circumstances, we can choose to serve notice to end the tenancy agreement under the terms of the Option Agreement.
During the five-year period, we'll aim to contact you on an annual basis to review your financial status and check that Rent to Buy is still suitable for your needs.
If you’re unable to buy your home, you’ll need to inform us six months before the end of the five-year term to allow you adequate time to secure alternative housing before the end of the tenancy term.
You'll be unable to end your tenancy agreement within the first six months. After this time, you'll need to contact us and complete a Tenancy Termination Form, giving no less than one month’s notice to end your tenancy.
We'll then arrange for the required end of tenancy inspections to be carried out. You must ensure that the property is returned to us in the same condition as when you moved in and that your rent account isn't in arrears.
If your circumstances change and you’re no longer able to fulfil the Rent to Buy agreement, we'd strongly advise that you contact us at the earliest opportunity.
If you've purchased your home on a freehold basis, without any ongoing service charge payments to ourselves, then you can sell your home at any time on the open market without contacting us.
If you own your home outright with an ongoing service charge, you’ll need to let us know when you're selling. This is because your purchaser will need to enter into an agreement with us to continue to pay the service charge and their solicitor will require a Management Pack from us.
There's a standard administration fee charge for the pack to be provided, which'll be confirmed at the time.
If you own the property on a Shared Ownership basis and wish to sell your share, then you'll need to contact a member of our Asset Sales Team prior to placing your home on the market for sale.
A member of the team will provide you with the required information and guidance on how to sell your share and will confirm the fees payable as outlined within your lease.
