Rent to Buy
The average asking price of properties coming to market in Wales is now £171,359 (Rightmove House Price Index Report, March 2014). The average deposit needed for first-time buyers is about 10 – 15% and although there are lower deposit deals around, your credit rating, income and deposit saving needs to be high to get past stringent lenders. Coupled with recent rent rises and housing shortage, buyers are finding it harder to obtain a mortgage.
What kind of buyers can Property Peace of Mind help?
– Low deposit
– Difficulty getting a mortgage
– Poor (or no) credit history
– Recently moved to the UK
– Your own business or are self-employed
– Experienced bankruptcy
What is Rent To Buy?
Simply, it allows tenants or buyers to rent a property with the option to purchase it after a period of time under a lease agreement. The buyer has the legal right to buy the property within an agreed time-scale for a pre-agreed price. The rent paid can be put towards the deposit needed for the mortgage.
Rent To Buy is often referred to as Rent To Own, Rent Now Buy Later, Own Now Pay Later, Try Before You Buy and Rent and Own. This initiative is not to be confused with traditional government or Affordable Housing schemes such as Part Buy/Part Rent, key worker or shared ownership.
See below to read recent articles from Grant Shapps, UK Housing Minister, supporting the Rent To Buy scheme and Findaproperty.com’s independent guide on the benefits of Rent To Buy.
What are the benefits? Here are 10 good reasons why Rent To Buy can help buyers:
2. No mortgage needed – move into your new home without securing a mortgage upfront.
3. No extra costs to pay – such as brokers, surveyors or agents.
4. Agreed purchase price – this is locked in with the option of purchasing it in an agreed time-scale with a fixed price. The price won’t rise and you won’t need to ‘catch up with the market/future inflation rises’. Also, if the property rises in equity, then you benefit from it.
5. Quick turnaround – we can make decisions within hours as can the seller so you don’t need to rely on lengthy approval times like with the conventional buying process and you can move into your new home quickly.
6. Control – you will have legal control over the property and the seller cannot sell it to anyone else. You have ownership from day one.
7. Security – no more ‘dead rent’ towards a property you don’t own as the money you pay will be mortgage payments paying towards your own asset.
8. Flexibility – you can walk away without buying if your circumstances change.
9. Home improvements – you can decorate or renovate the property and put your own stamp on it.
10. Try before you buy – buying a property is one of the biggest decisions of your life so it makes sense to live in the property and the area to see if it is what you want to own.
How does it work?
The tenant pays a small deposit (minimum 3%) to secure the property and ‘gain legal control’ according to the market value of the property. Solicitors are used to draw up the legal agreements and to check everything is in order.
The tenant pays rent (which is effectively the mortgage) and usually there is an extra amount on top every month which goes towards paying the deposit which is deducted from the final amount paid at the end of the agreement (the completion).
Articles and useful links:
Findaproperty.com has published a guide on the benefits of Rent To Buy/Rent To Own
Get in touch for available Rent To Buy properties in Cardiff and South Wales