Thinking of buying a property - SmartShare has thousands of properties to buy or rent across the UK
Rent to buy is a perfect option for people who are unable to buy a property outright and don’t want to waste money renting.
The idea of ‘rent to buy’ allows the homeowner to rent the property, trial the property and the area, with the option to buy at a later point.
Some private schemes offer a 12 month rental contract before you buy and others enable you to stay for up to three years before making a final decision. Others offer a rebate on the rent that has been paid e.g. tenants paying £500 a month on a £115,000 property will be given back all the rent paid at the end of the years contract, giving them just over five per cent deposit. So it’s worth looking around.
Before you complete the purchase, remember you are a tenant and must abide by the contract. However whilst you are renting, the idea is that you save up enough money and get yourself into a position where you are able to save up for a small deposit and afford a mortgage. When you are ready, the property will be professionally valued and a sale price agreed.
Please note that if you opt for a private scheme you will pay the market rent, rather than a discounted rent as offered by the Government scheme Rent to HomeBuy.
Rent to Homebuy is offered on specified newly built homes across England. The scheme is managed through ‘HomeBuy’ agents in other words housing associations who have been approved to run schemes for people who cannot afford to buy a property to suit their basic household needs in the area where they live or work.
This scheme is targeted towards and people who rent council or housing association properties, key workers and first time buyers.
There are two ‘HomeBuy’ schemes available:
Each scheme will require you to take out a mortgage to pay for your share of the home’s purchase price. Other than the Co-operative Bank who offers 100% mortgages, your lender will expect a cash deposit before they will lend you money through a mortgage.
If you don’t have enough savings to get a mortgage, the Rent to HomeBuy scheme could help. As you will rent a newly built home from a housing association for up to five years at a reduced rate. This gives you the chance to save up money so you can apply to buy a share of the home later.
Your rent can’t be more than 80 per cent of the market rate for your home. For example, if the market rent is £900 per month for your home, you will pay a maximum of £720. The housing association will set the market rent for your home.
When you are ready to buy your rented home (which can be at any time during your Rent to HomeBuy tenancy), you must go through the shared ownership scheme – this is known as ‘New Build HomeBuy’.
It works like any other shared ownership scheme where you buy a share of your home (usually via a mortgage) and pay rent on the remaining share.
When you are ready to buy a share, the value of your home will set the cost of the share. This means you will need to pay for a survey of your home to find out how much it is worth. For example, if your home is worth £100,000, the cost of a 25 per cent share will be £25,000.
Please note: If five years has passed and you cannot afford to buy a 25 per cent share of your home, your Rent to HomeBuy tenancy will end. In this situation, the housing association will review your situation and decide if you can continue to rent the home.
Look through the SmartShare website at all the properties in your chosen area and once you have found what you are looking for, click on the ‘arrange viewing’ form. If you haven’t already done so you will also need to register with your HomeBuy agent. A list can be found on the FAQ page.