Rent-to-Buy scheme.

Andos_2

Hi, I wondered how much people know about the Governments rent-to-buy scheme. In case you didn't know anything atall about it, read below!

I have enquired about a 3 bed new build home that will be available October this year. I'm on the Homebuy scheme so can apply, and they have confirmed sub-letting with my friends is ok. :T

This scheme involves the 3 bed, being rented for £560 (80% of market rent value) giving me a chance to save towards buying the property within 5 years of renting.

Obviously they have to take into consideration initially if I can afford the rent. Which I can shared with mates! But what I need to know is will they consider whether I can afford to buy the property/have a credit score at the outset or be understanding that credit score/income etc will improve during the 5 year rent period by which point affording the property will be more feasible?

Any help with regards to this scheme is much appreciated. cheers!

The Government Scheme – Rent to HomeBuy

"The main distinction between the private and the government scheme is that with a private scheme you will pay the market rent, rather than a discounted rent.
This new scheme is part of a Government venture to buy up unsold developer stock and bring it into the affordable housing sector.
If you haven’t heard of Rent to HomeBuy that may be because, although it was announced last summer, we’re still waiting for the pilot schemes to unroll.
How will it work?
The idea is that you will be able to rent a new-build home at a given development, with a view to buying it, within a defined period, anticipated to be around three years.
The rent will be set at 80 per cent of the market rent, or less, to allow you to save for a deposit.
At the end of the defined period, as long as you can pay the deposit and your circumstances haven’t changed for the worse, you can buy a share in the property under the terms of the new build homebuy scheme.
This briefly means that you would buy from 25 per cent to 75 per cent of your home on shared ownership terms, and pay an affordable rent on the rest.
You would also have the option, as you become able to afford it, to buy additional shares until own 100 per cent.
Downsides
Firstly, if you can’t proceed with the purchase at the end of the term your tenancy may not be renewed, and you may have to move out of your home.

And secondly, it’s not open to anyone.
The scheme is aimed at first-time buyers who earn up to £60,000, but can’t afford to buy a property to suit their basic household needs in the area where they live or work.
Although most first-time buyers are eligible, priority may be given to social tenants and public sector key workers.

However, people who have previously owned properties but are now unable to buy, eg because of relationship breakdowns, and families in over-crowded accommodation, may still be able to apply.

Thirdly, if you decide to sell and you own less than 100 per cent of the property, you would have to sell it to another household nominated by your landlord.
Pilot schemes are about to begin, so if you want to find out more, visit the Housing Corporation website and find your local HomeBuy agents."

Andos_2

Any help, with regards to this scheme is great...:cool:

lynzpower

Ive been looking at this scheme to. Cant find any reason not to go for it tbh. We are just waiting for the right place ( needs to be a house realy as we have a dog) then we will grabbit if we see one.
Seems like a great scheme to me, althugh the only question Ive got is when the valuation
to buy it is done. I presume at the end of the 2 years renting the val woud be done ( ie if values continue to fall) You dont have to buy at that time, and in the beginning the rents seem low and secure.

PasturesNew

"first-time buyers who earn up to £60,000, but can’t afford to buy a property to suit their basic household needs in the area where they live or work"

This bit would restrict you to the house being in an area where you currently live or work. If, for example, you were trying to move back to an adjoingin area where your parents/friends live (but had been forced out as you couldn't afford to), you'd not be able to as you aren't currently living or working in that area - so you might need to check that criteria. Areas would be defined by the boundaries of the particular authority, so if you live on/near a border you could find the house is on the wrong side.

"basic household needs " - for a single person, I'd have interpreted that as meaning "only a one bedroom place", yet you are thinking of pursuing a 3-bed, which couldn't be called "basic household needs ".

The issue here is mortgageability in 3 years' time. What if the property is worth less. What if you've lost your job. If you found yourself temporarily between jobs precisely at the point when you HAD to buy, you might find that you've ploughed your hopes and dreams into getting the property, only to be unmortgageable within the timeslot you have to buy it.

I'd be wary of broad promises and assumptions ... compared to realities and small print.

sleepyj

Problem 1 : On these schemes the new build property you buy are valued above the market average
Problem 2 : Should you need to sell it is particularly difficult. You cannot do it on the open market until the HA has made an attempt to find you a buyer. Even when you put it on the open market it is incredibly difficult to sell these properties right now.
Problem 3 : Watch out for inflation. If we get that, interest rates go up and your rent AND mortgage costs will go up a lot

diable

How many first time buyers earn £60k? Even jointly.....

lynzpower

Plenty in london id say

Agbe

Plenty in london id say

Indeed. And if you're living in London (as we are), that amount of money counts for very little, when it comes to mortgage-applications.