Rent To Buy

With Rent to Buy, you get all the benefits of home ownership but with far less risk.

Unlike when you buy a house in the normal way, you are not saddled with the risk of taking on a large mortgage from day one.

That means that if you change your mind, or your circumstances change, then subject to losing your deposit, you can simply give notice as normal under your tenancy agreement, and walk away.

Nothing to pay, no questions, no costs, no mortgage and no negative equity!

Conversely, the current owner of the property is legally committed to selling it to you at the price in the contract for whatever number of years you both agree in the agreement. They simply cannot change their mind or the price, even if they want to.

If house prices fall you can walk away if you want to, or continue to live in your home as a normal tenant.

But if house prices rise, you get the benefit!

You probably have questions – we’ve being asked many and have put together some FAQs

Frequently Asked Questions

No mortgage is required to move in, so how do I buy the house?

When you move in, you do not need a mortgage. You don’t need a large deposit and you don’t have to worry about getting approval from a lender. You have up to 5 years to buy the Rent To Buy house at the fixed price.

If for whatever reason you are not ready to buy after 5 years, the agreement continues up to a maximum of 10 years. Only when you buy will you need a mortgage.

This is why the scheme works so well. During this time your deposit builds to a level where (subject to status) you may be able to get a mortgage for a high street bank who will typically require a 10% deposit.

Our Rent to Buy plans are designed to allow you to build up this level of deposit while you enjoy living in your new home.

Is Rent to Buy a Government approved scheme?

It’s a private sector initiative which in parliamentary reply to David Morris MP concerning a Rent To Buy scheme, received support of Grant Shapps (Housing Minister). He expressed his backing for the scheme because it addresses the current challenges of the housing market.

What is the difference between buying in the first 5 years, or up to year 10?

Our Rent To Buy Scheme has been designed to enable people to build up a sufficient deposit in the first 5 years (10%), because most people want to own their house sooner rather than later.

For certainty we fix the price and rent. Given that rents can increase by 5% each year, this gives you a massive saving over the fixed term.

However, we understand that life is not always predictable and you cannot be 100% sure if you will be in a position to get a mortgage at year 5. For this reason, our agreements provide that you can purchase your Rent To Buy home at any time up to 10 years. This means that you can proceed with greater peace of mind.

The only difference is that after the first 5 year fixed price term, the seller shares any house price growth with you. So you get ALL growth for the first 5 years and you get a share of any growth in the remaining 5 years.

Example (based on a fixed price of £100,000):

If prices rise at an average of 5% each year, after year 5 the value will be £127,628, but you can buy at any time within the first 5 years for £100,000, making a £27,628 profilt.

If you decide to wait until year 7, and house prices have gone up a further £10,000 between year 5 and 7, this is shared with you, so you only have to pay £5,000 more.

So at year 7 the house in now worth £137,628 and you can buy it for £105,000, making a £32,628 profit.

House price increases are based upon government indexed regional data as reported by HM Land Registry and published monthly .

After the first five year period, you continue to pay rent and your top up deposit as normal. This means that you will have an even bigger deposit fund when you come to buy.

What if I can’t get a mortgage?

Given that you have 10 years to purchase your Rent To Buy house, you have plenty of time to arrange a mortgage. However, if you are unable to get a mortgage you could:

  1. Sell the house on and make a profit based upon your equity and any increase in value. This is our recommended option.
  2. Walk away. If you did this you would lose any deposit in the account.

Is it true that I can still sell the house at any time for a profit?

Yes! This is one of the best features of our Rent To Buy scheme. You get all the benefits of home ownership, without needing a mortgage.

So as your deposit grows and if house prices increase over time, you can sell on and release the equity and start moving up the housing ladder. Your days of paying dead money for rent will be over.

What happens if house prices fall over 10 years?

In the history of the housing market there has never been a period where house prices have dropped over a 10 year period (source Nationwide data recorded since 1952).

However if they did, you will have hopefully built up enough equity to still put you in profit. Should there be a serious price correction in the housing market, you can simply walk away without any obligation. Latest house price index information can be found here: Nationwide House Price Index

Why don’t you refund the deposit if a buyer does not complete on a purchase?

We are looking for people committed to buying our houses. We have provided an affordable Rent To Buy Scheme and the seller benefits from the certainty of a sale at a fixed price. They pass on the benefit of any house price growth in the first 5 years to you.

Just as someone who is buying a house with a mortgage cannot ask their lender for their deposit back if they want to move, it is only fair that the same principal applies to our Rent to Buy legal scheme. However, as with a property bought in the traditional manner, you can sell to release any equity and get back your deposit.

When you complete the purchase, the money is paid to your nominated solicitor. If for whatever reason the owner did not complete the sale (and remember, they are legally contracted to do so), then the owner must repay the money to you in full.

What happens if somebody dies before the house is purchased?

Morbid, we know, but our lawyers think of everything! If it’s:

  • The Seller. The agreement will continue and will be completed by any surviving seller or their estate. As such it will not affect the Rent to Buy agreement at all.
  • You. The agreement will continue to be completed by the last surviving tenant benefit. Upon the death of the last surviving tenant, all payments held in the Trust Account will be repaid to the Tenant Buyer(s) respective estates in equal shares.

Is interest paid on my deposit?

No. Any interest that is earned on the deposit is used towards administering the scheme.

How does the legal process work?

When you buy a house the traditionally, you exchange contracts. This is when both sides are legally committed to the sale and purchase. You then agree a date for “completion” – the exciting part when you get to move in.

With “Rent to Buy”, you enter into a legal contract in the same way, except “completion” (the point where the house is signed over to you and the monies are paid), is extended to up to 10 years by the “Rent to Buy” contract.

However, you can move in straight away. The seller is legally committed to sell the house at the fixed price. They cannot back out, change their minds or revise the price. You may walk away if you decide that for whatever reason you do not want to proceed.

So if house prices double, will the owner try and change the price?

No! Under the legal agreement the price is 100% fixed for 5 years! After 5 years any further growth is shared with you. Your lawyer will make sure that all the legal contracts confirm that the price is guaranteed. So you get the benefit of today’s price and hopefully many years of house price growth all to yourself!

Who carries out maintenance to the house?

It is your home now and for you to decorate and improve as you please. We only ask that you seek the owner’s consent if you carry out any works of a structural nature requiring planning or building approval. And remember, you benefit from any increases in the value of the property as a result of any improvements.

The seller will carry out an annual gas safety check. You cover other maintenance costs and utility bills as you normally would do when you own a house.

What about insurance?

The seller pays for house building insurance which is an additional saving for you. If you need to make a claim on the building insurance, it will be subject to you paying a £500 excess. You must take out contents insurance for your own possessions.

What happens if I can’t afford the payments?

Just like having a mortgage, it is your responsibility to pay the rent and monthly deposit top up. If you get into any difficulties you should contact us to agree a proposal for payment.

Just like a normal mortgage or tenancy, your home is at risk if you do not keep up your repayments. If you default upon payment and do not clear the arrears after 2 months, you risk the tenancy being terminated. If you breach the tenancy, your right to purchase the house will be lost.

These are the same risks that would apply to a normal purchase, but your lawyer will discuss these aspects with you.

Okay, I am interested! But do you allow pets?

Of course.

Rent to Buy is not like renting where you have to ask the landlord if you can put up a picture! Once you have agreed to take one of our properties it becomes your home. If you have pets, that’s absolutely fine – and better still, you don’t even have to ask our permission. All we ask is that they are house trained.

Many people choose us because they cannot find a quality rental property that allows them to keep pets.

We will endeavour to answer any other questions you may have but ultimately your solicitor will explain the full details to you BEFORE you are asked to pay any deposit monies.

To give you added reassurance, we often offer the ability to rent on a normal AST contract for a short period, usually 6 months , to let you settle in and FEEL if the property and area is right for you. After that then you can change to a RENT TO BUY contract.