Rent to Buy scheme: A guide

Rent to Buy is a government scheme that makes it easier for tenants to get on the housing ladder.

Applicants can rent property at 80% of the market rate, then receive a 10% gifted deposit from the housing association when they’re ready to buy it.

Their lease could last anywhere between six months and five years, depending on the property and the tenant’s circumstances.

During any point of the lease, tenants can apply to buy the property outright or via shared ownership. However, there’s no obligation to do so.

How does Rent to Buy work?

The first step to getting involved with Rent to Buy is to register for the scheme via your local Help to Buy agent. The scheme may have a different name, depending on your local authority.

Either way, your Help to Buy agent will assess your eligibility and add successful applicants to its database. It may contact you with opportunities to take on a Rent to Buy tenancy, but it’s best to be proactive about applying.

You can browse and apply to live in participating properties using your local Help to Buy agent’s website. The original plans were to build 10,000 Rent to Buy properties across the UK, although half of these were planned to be built in London, so you may not have too much choice.

You won’t need to provide a rental deposit to move in, although you’ll have to pay your first month’s rent in advance. Your landlord remains responsible for repairs until you buy the house.

Although there is no obligation to buy the property you live in at the end of your lease, there is an expectation that you should want to do so.

Your Help to Buy agent will be in contact towards the end of your lease to check on your post-lease plans, and will make alternative plans to sell the property if you’re not ready to buy it.

What is the eligibility criteria?

To be eligible for Rent to Buy, your household must:

• Earn £60,000 a year or less (or £64,300 in London).
• Be a first-time buyer(s) or previous homeowner(s) who can no longer afford a property.
• Have a good credit score. You can check your credit score here.

Individual housing associations will have their own rules when it comes to who is prioritised for Rent to Buy properties. It is common that existing housing association tenants and council tenants will be prioritised. First-time buyers may also receive priority ahead of previous homeowners.

Other available schemes

• Help to Buy. This scheme allows you to borrow up to 20% of your property’s value from the government to add to your mortgage deposit. It’s interest-free for the first five years, but you’ll need to pay it back when you sell the property or at the end of your mortgage term. There is a bigger range of properties to choose from, and a more generous minimum annual household income (£80,000, or £90,000 in London).
• Right to Buy. If you live in a council or housing association property, you may be able to buy it at a huge discount under this scheme. You’ll need to be living in the property for at least three years to be eligible. The longer you’ve lived there, the bigger the discount you’ll be entitled to.
• Shared Ownership. This scheme allows you to “part buy part rent” a property. You’ll only need a mortgage for the stake you’re purchasing. You’ll pay rent on the remaining stake, but will have the option to buy further stakes later on.
• Starter Homes scheme. It’s targeted for there to be 200,000 “starter homes” in the UK by 2020. These properties will be made available at a 20% discount, compared to the market value.

What are the pros and cons of Rent to Buy?