Choosing the right Rent to Buy home
Buying your first home is a huge financial investment, so you’ll want to ensure you get it right the first time around. Removing the uncertainty that comes with finding the perfect home, Rent to Buy could be the best way to go about it. As well as offering you an affordable way to rent, the scheme lets you test-drive your home while giving you a platform to buy it in the future.
Unsure how to make proper use of the Rent to Buy scheme? Check out our guide to fill in the blanks.
What is Rent to Buy?
Rent to Buy is a government-backed scheme that enables you to try out your dream home before you buy it. Offering you an escape from sky-high rental prices, you’ll be able to rent a home on a subsidised basis (20% lower than the market value), with the option to buy using Shared Ownership further down the line.
How to use Rent to Buy?
- Find out if you’re eligible.
- Do the math.
- Pick a location that you love.
- Save to buy.
- Purchase your home using Shared Ownership.
Find out if you’re eligible
Before you can start enjoying the perks of Rent to Buy, you first need to work out if you are eligible! Given that the scheme is designed to help people who can’t currently afford to buy a home, it’s perhaps no surprise that you can’t already own another property, and your household income must be £60,000 a year or less. Rent to Buy does require that you are part of a working household, with a sufficient income that will allow you to both rent and save for your future deposit, and also have evidence of a good credit history.
Do the maths
After finding out if you’re eligible, it’s time to do some quick calculations. Rent to Buy involves renting your home on an Intermediate Rent basis, which means paying 80% of the rental market rate. For example, if the market rate is £1,000 a month, your Rent to Buy rent will be £800 a month. This means you’ll have an extra £200 to put towards your house deposit.
Pick a location that you love
If location means everything to you, you’ll be delighted to know that Rent to Buy can help you live in some of the most desirable parts of London and beyond. However, as the scheme can be quite limited, you’ll need to do your digging on what kinds of housing providers currently offer the scheme. Wondering what types of homes are available? Rent to Buy is usually available on specific new-build properties, but there may be some cases where you can also pick from existing resale homes.
Save to buy
One of the wonders of Rent to Buy is that it gives you extra breathing room to save up for that dream home. Protecting you from premium rental prices across the country, a 20% discount can really go a long way. If you choose to take advantage of the scheme, your housing provider can even help you work out a savings plan that makes it easier to save up for a deposit. With regular meetings to check up on your progress, there’s no excuse for steering off track with your savings.
Purchase your home using Shared Ownership
Rent to Buy isn’t just an affordable way to rent in the present. It’s also a great starting point to own your home in the future! After a period of around two years, you’ll be given the option to purchase your home on a Shared Ownership or equity loan basis. This is a great option if you want to give your home a trial run before you buy it. And don’t worry about struggling to get the right funds together. Your housing provider can step in to assess your financial situation, and advise on what share of the property you can afford!
To find out more about other affordable buying and renting options, head to our article index, or check out our FAQs and guides for some helpful tips. Alternatively, you can get your house-hunting started on Share to Buy’s property portal today!