Rent to Buy

RenTheRoosta

Apologies if this has been posted before.

Has anyone had experience of Rent to Buy e.g. 5k deposit, rent at higher rate for 5 years then apply for mortgage for the rest?

If so how did it work out for you? Would you recommend it?

I have had to come off income support after coming into some inheritance. Unfortunately this coincided with me getting pregnant with my second baby (19 weeks now) so getting a permanent job will be challenging right now. Wondering if I can use some of the inheritance to fund the deposit then pay the rent during the 5 year period. I'm guessing I'd need to get a job to prove I will have an income regardless of savings.

Rent to Buy seems to be the least well known government housing scheme. Any information would be greatly appreciated.

Thank you

Caz3121

looks like you need to find a local agent....do you want a new-build?
https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/rent-to-buy/

RenTheRoosta

Caz3121 wrote: »

looks like you need to find a local agent....do you want a new-build?
https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/rent-to-buy/

The ones I've seen so far are old houses on the open market not new build. I'd prefer an old house personally.

I know nothing of how safe it is to enter into a Rent to Buy agreement though. Wondering if it would be cast iron or if the original owner could pull out before you have the chance to buy meaning you lose your deposit...

sal_III

I would only trust government approved schemes and housing associations with such a move.

Anything like that on the open market is akin to a scam IMHO. Even if there is a trustworthy scheme it's not suitable in your case.

Higher than market rent is supposedly charged to accumulate the "extra" portion into a future base for a deposit, essentially turning your LL into a ISA. Why on earth would you trust your LL with your savings over a bank? Simply pay market rent and save the "extra" portion yourself. Or do you think that the LL will go out of pocket by apportioning more than the over-market portion to savings...

Last but not least, your situation is the reverse - you have the "savings" in a lump sum at the beginning. You are not looking to accumulate the deposit, so any rent-to-buy is not worth it in your case.

If you have no income just apply for whatever benefits you can to subsidise your rent and keep the lump sum in ISA/LISA for when you go back to work and use it for deposit.

RenTheRoosta

sal_III wrote: »

I would only trust government approved schemes and housing associations with such a move.

Anything like that on the open market is akin to a scam IMHO. Even if there is a trustworthy scheme it's not suitable in your case.

Higher than market rent is supposedly charged to accumulate the "extra" portion into a future base for a deposit, essentially turning your LL into a ISA. Why on earth would you trust your LL with your savings over a bank? Simply pay market rent and save the "extra" portion yourself. Or do you think that the LL will go out of pocket by apportioning more than the over-market portion to savings...

Last but not least, your situation is the reverse - you have the "savings" in a lump sum at the beginning. You are not looking to accumulate the deposit, so any rent-to-buy is not worth it in your case.

If you have no income just apply for whatever benefits you can to subsidise your rent and keep the lump sum in ISA/LISA for when you go back to work and use it for deposit.

Thanks for that. I was thinking of using some of the inheritance to set up self employed and go down the shared ownership route with my housing association once I have the relevant amount of accounts to prove financial capability. But seeing Rent to Buy advertised online wondered if it could be a quicker route.

sal_III

The government approved rent-to-buy scheme is essentially re-stage for shared ownership if you read the website in the link above. Only harder to qualify. And aimed at people who have little or no savings not enough for deposit to allow them to save more of their income by charging under market rate rents. Again this is not you.

In any case shared ownership is for new builds only, you said you want an old house, so still not you.

I'm not sure what you mean by setting up self employment, are you planning to do something as a self employed that generates income, or are you planning to "pass" your inheritance as income from self employment?

Cakeguts

Where are you living now? If you have come off income support and are saying that getting a job now is difficult that suggests that you were not already working. For someone in this position buying a house is not sensible because there are no benefits that will pay a mortgage. If you find you are unable to pay the mortgage and you get into arrears the house will be repossessed and you could find yourself homeless. You are safer to keep renting.

RenTheRoosta

sal_III wrote: »

The government approved rent-to-buy scheme is essentially re-stage for shared ownership if you read the website in the link above. Only harder to qualify. And aimed at people who have little or no savings not enough for deposit to allow them to save more of their income by charging under market rate rents. Again this is not you.

In any case shared ownership is for new builds only, you said you want an old house, so still not you.

I'm not sure what you mean by setting up self employment, are you planning to do something as a self employed that generates income, or are you planning to "pass" your inheritance as income from self employment?

Ha I'm getting confused on schemes. I meant right to acquire. I want to start own business in animal services. Would keep my savings in ISAs until ready to do something with them. Would obviously need to spend some on starting own business but outlay wouldn't be astronomical setting up as a dog walker/pet sitter.

RenTheRoosta

Cakeguts wrote: »

Where are you living now? If you have come off income support and are saying that getting a job now is difficult that suggests that you were not already working. For someone in this position buying a house is not sensible because there are no benefits that will pay a mortgage. If you find you are unable to pay the mortgage and you get into arrears the house will be repossessed and you could find yourself homeless. You are safer to keep renting.

I was a SAHM to my toddler when I came into the inheritance. I don't doubt I could get a job but I would like to take the opportunity to start up self employed as a lot of people don't get the chance to try it due to financial restrictions. Agree I am safer to keep renting until I've proved my self employed business is viable then try to purchase a housing association property.

Caz3121

RenTheRoosta wrote: »

Ha I'm getting confused on schemes. I meant right to acquire.

do you mean this scheme? https://www.gov.uk/right-to-acquire-buying-housing-association-home
are you already in a housing association property?