Rent-to-buy scheme

Claree__x

Afternoon all.

We're in the process of applying for a flat through a rent-to-buy scheme and it's all sounding a bit too good to be true. There's criteria in place (earnings limit, link to the area etc) which we match and all of our references are good (pending one from OHs employment but no issues foreseen there).

The deal is that rent is £512/month (which is way below market rent for the area anyway) but half of your rent each month is put into a deposit pot which you can use if you choose to buy the property after the 1st, 3rd or 5th year up to a maximum of 10% of the property value.

I just don't get it? Is there a catch? I've not had full paperwork yet as we are still in the application stage but just wondering if anyone else had been through such a scheme.

fairy_lights

Who is offering this scheme, and where will they be holding this 'deposit pot'?
If this was legit I can't see what would be in it for the seller.
If it sounds too good to be true, it usually is.

Claree__x

http://qsh.org.uk/100-rent-to-buy-properties-to-be-built-in-doncaster/

This isn't the development we're looking at but it's the same scheme by the same company.

Arthritic_Toe

If the rent is genuinely competitive on its own, then there's nothing to lose really. Check the small print though - if you decided to buy after 3 years for example, who gets to decide what the purchase price is at that point? - or is that stated at the outset? They may just lump on an extra 10% to cover that deposit 'refund'.

beecher2

I think it sounds a great initiative and the quotes on here sound supportive
http://www.examiner.co.uk/news/west-yorkshire-news/15-new-rent-buy-homes-11546139#ICID=sharebar_twitter

Claree__x

Arthritic_Toe wrote: »

If the rent is genuinely competitive on its own, then there's nothing to lose really. Check the small print though - if you decided to buy after 3 years for example, who gets to decide what the purchase price is at that point? - or is that stated at the outset? They may just lump on an extra 10% to cover that deposit 'refund'.

In the documentation it says that "If you choose to purchase the property you will receive a discount of up to 10% of the open market value, this is separate from your deposit pot". The agent told us it would be valued at the time of selling but I guess we'd have to enquire as to who was valuing it!

beecher2

This is quite a good article for background on the initiative
http://www.insidehousing.co.uk/new-players/7012340.article

and I think the fact that they were finalists in the UK Housing Awards is a very good sign
http://www.insidehousing.co.uk/uk-housing-awards-2015/7012132.article

Arthritic_Toe

Claree__x wrote: »

In the documentation it says that "If you choose to purchase the property you will receive a discount of up to 10% of the open market value, this is separate from your deposit pot". The agent told us it would be valued at the time of selling but I guess we'd have to enquire as to who was valuing it!

Interesting - so the discount is in addition to the deposit pot. Note though, that "up to 10%" could be 1%.

Claree__x

Arthritic_Toe wrote: »

Interesting - so the discount is in addition to the deposit pot. Note though, that "up to 10%" could be 1%.

Could be 0.1% knowing my luck!:rotfl: