What is Rent to Buy?

What is the Rent to Buy scheme?

With the Rent to Buy scheme, you can rent a new build home at a discount to help you save up a deposit to buy a home of your own. You might sometimes see it referred to as Try Before You Buy, Rent to Save, Rent to Own, Intermediate Rent or Living Rent in London. Rent through the Rent to Buy scheme is around 20% cheaper than the average rent in your area for up to five years, although the exact period of time varies by property. 

The money you save from the discounted rent allows you to put more money towards buying your first home. 

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How does the Rent to Buy scheme work?

To get a Rent to Buy property, you need apply to rent a home from a registered Rent to Buy landlord or housing association. You can rent the property for an agreed short-term period, which can be anything from 6 months up to 5 years. During that time, you’ll be given the option to buy the property you’re renting or to buy part of it under a Shared Ownership scheme. You have until the end of your agreed tenancy to save your deposit and make any decisions. But once your lease is up, if you haven’t bought the property you will need to move out. 

In Wales, the scheme is called Rent to Own and instead of paying a discounted rate you’ll pay the going rate for up to five years. After two years you’ll have the option to buy the property. If you decide to do this, you’ll get 25% of the rent you have paid and 50% of any increase in the property’s value since you moved in, which you’ll use as a deposit on the purchase. 

Is Rent to Buy available in Scotland?

No, Rent to Buy is not available in Scotland at the moment. But there are alternatives to Rent to Buy you could look at, including shared ownership. 

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Who is eligible for Rent to Buy?

Not everyone is eligible for Rent to Buy, as it’s aimed at helping first-time buyers who are struggling to put money aside for a house deposit. To be eligible, your household needs to earn £60,000 a year or less, and you need to be a first-time buyer. If you’ve owned a home previously, you could still be eligible if you can’t afford to buy another property now.

However, there are also additional eligibility criteria depending on the housing association offering the Rent to Buy property. For example, priority might be given to existing housing association tenants and council tenants.

Pros of the Rent to Buy scheme

• 20% discount on rent 🔥
• Try before you buy (handy for one of the biggest purchases of your life)
• Your landlord has to give you first dibs on the property if you want to buy (no bidding wars!)
• You can buy part of the home through shared ownership
• Normally, you don’t have to buy the home you’re renting if you don’t want to

Cons of the Rent to Buy scheme

• It’s not available in all areas
• Rent to Buy properties are in really high demand and can be hard to come by.
• The criteria can be different by housing association/landlord — some aren’t as flexible as others
• There’s pressure to save your full deposit before your lease is up. You might not be ready to buy your home at that time
• If you want to buy the home you’re renting, it’ll be priced at the current market value, which could be higher than it was when you first started renting
• You can only buy the home you’re renting if your landlord agrees — which is not always guaranteed.

How to get a Rent to Buy property?

To start your search for a Rent to Buy property, you will need contact your local housing associations  If you live in London, use the Mayor of London’s first steps to home ownership website Homes for Londoners. 

Do you need good credit for the Rent to Buy scheme?

Yes, you do need a good credit history to qualify for the Rent to Buy scheme. If you have poor credit, there are things you can do to improve your score, as well as options if you are looking to get on the ladder with adverse credit.

Is the Rent to Buy scheme a good idea?

It’s worth considering Rent to Buy as an alternative to renting and a way to save up for your first home quickly. However, there is limited availability and the exact number of properties available varies by local authority. For this reason, you may find it hard to get onto the Rent to Buy scheme. It is worth considering other ways to save up for your first home quicker, like using a Lifetime ISA or using an alternative buying scheme like shared ownership.