What Investors Should Know About The Rent To Buy Scheme
For many people, buying a home in a city like London could very well be beyond their reach. The prices are often through the roof and there are just way too many regulations, terms and conditions that need to be met. That is why many opt for the countryside. But that does not mean that they have lost sight of those fantastic ‘own a piece of London’ dreams.
In a wonderful twist of events, the Government can now help you realise those dreams by easing the transition from renting to buying a home. The ‘Rent to Buy Scheme’ is meant for those of us who have steadfastly held on to their dreams of owning a home.
Basically, this is a Government scheme that aims to ease the transition from renting a home to buying one by providing qualified applicants with subsidised rent. As it stands, people can now rent a newly constructed home at about 20% below the prevailing market rate for a period of up to 5 years. This 20% discount is ideally supposed to go into saving up for the required deposit should you decide to buy the house.
As per your lease agreement, you will be required to either fully buy the house when your period elapses or at the very least buy part of it on a ‘shared ownership scheme’ (link in the private message). Either way, at the end of your lease period, you either buy or leave.
What Investors Should Know About the Rent to Buy Scheme?
This is a wonderful opportunity for those investors who qualify. At 20% below prevailing rent rates, you would have access to properties that you otherwise might not be able to afford. If you play it correctly, in 5 years you may own a wonderfully posh piece of London. This, obviously, is a dream come true for many.
You, however, need to be careful about the associated terms and conditions. The properties within this scheme are offered by different housing associations. These offers vary greatly from one association to the next. You need to thoroughly read the fine print for you to see whether or not the deal is a good fit.
There is also a downside to taking part in this scheme. Since the lease periods vary from 6 months to 5 years, should the property prices rise within that period, they could very well go beyond your reach again. It is best to take advantage of short-term lease periods instead of risking longer periods where market forces pose greater risks of heightened property prices.
Do I Qualify?
To qualify for this scheme, you need to meet the following criteria:
• Have a good credit history
• Be a first-time buyer or someone who used to own a home but cannot afford one at the moment
• Earn less than £60,000 as a household (you and your spouse)
• £64,300 if you want London homes.
There are also other eligibility criteria that vary depending on the housing association you choose to use. To check whether you qualify for the targeted scheme, simply log on to ‘local help to buy agent (link in the private message) or First steps website (link in the private message) for those living in London.
What Do I Need to Do?
It is quite simple. All you have to do is register with your local ‘Help to Buy’ agent. This will show you whether or not you qualify and will keep you in their database. You may even get a call should there be suitable properties available in the market.
To make your chances of landing a wonderful piece of property, you should proactively search for available properties at the same website. Once you find a property you like, simply call the number and see if you qualify then take it from there.
If you qualify for this scheme, it is a wonderful way to start paying and saving up for your first home. For those households that make less than £64,300, this is the perfect opportunity to buy and own a home.
But What If I Don’t Qualify For The Government Program?
Rent-To-Buy transactions have been done in the private sector. For those who have attended property seminars, you may be familiar with guys like Simon Zutshi, Glenn Armstrong and Rick Otton, who have all taught how this process can work. But before entering into this kind of arrangement, be sure you are consulting a solicitor who is an expert in this process to avoid any legal issues.