Rent to Homebuy - any advice please?

AliceBanned

Just posting this again as I didn't get a response. I am a Housing Assoc tenant with an Assured Shorthold tenancy. I've just been to see a new build rent to homebuy flat five miles from where I live. I was only going out of interest, but I liked it so much I am considering moving there. The rent would be £120 per month more than I am paying now for a smaller but brand new and nicely finished flat, in Victorian style with sash windows. I live in a 1960s concrete maisonette which I have had trouble getting a mortgage for on Right to Buy, despite a £13.5k discount from the HA, because it is an unusual construction, though it has been "reinstated" to brick so is technically mortgageable; it isn't at the moment and this has put me off.

The HA have given me first refusal of the flat - or they say so - maybe this is a marketing tool and nobody else is interested. I thought about the flat when I went to sleep and as soon as I woke up. Can't understand fully why, as it is small, but maybe because I've lived in fairly scruffy HA flats and it is nice to think I could afford this. It was valued at £98k in jan and they would sell me up to 75% in the first year, and I could purchase the full flat after that. It is in Bedfordshire so this is average price for the location. I want to make a sensible decision for the longer term - the HA flat I am in is bigger and costs £70k but I can't buy it (or not easily at the moment). I have a paid CCJ and unpaid default from 5 years ago, obviously affecting things, and only 3k deposit so far. the point of the rent to homebuy is meant to be 80% of private rent, so that you can save for deposit but at £440 per month plus my £250 pm train fare I'd save slowly anyway, but in the HA I'd be paying less rent so could save more for deposit. I earn £25k.

Sorry it is so long but I'm in a dilemma as I'm a bit bowled over by a cute and brand new flat which may or not be a better long term investment than an ex HA/council, but is not as affordable and I'm trying to balance my head and my heart. I know people on here are against shared ownership generally and I understand why; my aim though would be to buy 100% within two years. any feedback would be very helpful! Many thanks

ps I give up the AS tenancy if I take the rent to homebuy flat and after five years if I haven't bought at least 25% share the tenancy will be "reviewed". I've asked whether there are any cash incentives for giving up my other HA flat - might as well try:D

Fire_Fox

What are the service charge and major works arrangements on the new flat? Have you factored these costs into the equation? Have you informally asked if there are any major works planned for the next five years (your solicitor will do this formally as part of the conveyancing? Can you not move somewhere closer to work so you aren't paying £3K per year on travel costs alone? Why haven't you paid off the default if you have savings? Realistically how long do you think you will remain in your next home, what are the chances of becoming one half of a couple or starting a family?

geoffky

A assured tenancy to most people who rent privately is worth a fortune.I for one would be very very reluctant to give one up.

AliceBanned

Fire_Fox wrote: »

What are the service charge and major works arrangements on the new flat? Have you factored these costs into the equation? Have you informally asked if there are any major works planned for the next five years (your solicitor will do this formally as part of the conveyancing? Can you not move somewhere closer to work so you aren't paying £3K per year on travel costs alone? Why haven't you paid off the default if you have savings? Realistically how long do you think you will remain in your next home, what are the chances of becoming one half of a couple or starting a family?

Hi FireFox

Thanks for your reply. Service charge £40 per month (included in the £440 pm whilst renting and then same charge as a leaseholder thereafter). Maintenance costs they have to get back to me on but it only includes a small driveway to the carpark I believe - there is no major works cost for the building at all. I don't have full paperwork yet but will look into all of this before I decide.

I think you have helped me with some answers in a previous post - I am in a bit of a bind in some ways because I have the assured shorthold tenancy and as the poster below mentioned, it is very valuable yet I have had to consider renting privately nearer work, but just don't think it's sensible to give up the SH tenancy so am stuck with 3k train fares for now.

I've taken advice about the default and I am in a position to offer to pay some of it off as a final settlement, but I don't want to end up with it on my credit file for even longer (as it can be if I contact the debt collector so I am staying quiet). I am still unsure whether this is the best solution - it will be removed from my file July 2011 and although that sounds bad, I paid so much in interest that I never agreed with paying it all off, yet Abbey (at the time) would not come to any arrangement or budge on it at all, so I gave up, whereas I paid off all my other debts (about £6k altogether) because lenders negotiated manageable amounts.

I am going to see a possible homeswap (ie council exchange) flat in Epping on Sunday but with mutual swaps of housing assoc and council it is tricky to finalise, but I am trying as best I can to move nearer London without giving up the tenancy.

I hope I don't always live alone - there is a possibility this may change in the future, yes.:) But nothing imminent..

I am also exploring option of getting a lodger for a few months - it is only one bed flat but quite large, but I need a small bit of work to be done to make this feasible. This would be a temporary solution to help me save for a deposit and then be freer to choose on the open market. I am also looking at other shared ownership options but the down side seems to be that the prices are not so negotiable as with buying on the open market and therefore more of a risk to buy in terms of future worth (ie because they can more easily be overpriced). Which is my main worry with the new build flat I'm talking about.

Thank you both for replying.