‘Generation Rent’ is a term that’s been used quite frequently over the last few years, as young prospective buyers have struggled to get in to the market. While there does appear to be a lack of available housing today, affordability is the biggest hurdle for the current generation as prices continue to rise.
Fortunately, there now are many schemes that aim to help people onto the property ladder and one of these is the Rent to Buy scheme, which was set to up to ease the transition from renting to buying. We take a look at the Rent to Buy scheme, it’s conditions and if it’s right for you.
What Is The Rent To Buy Scheme?
Rent to Buy is a government schemed that allows you to rent a newly built property at a considerably cheaper rate (approximately 20% lower) for up to five years giving the renter the opportunity to save some money towards a home.
This time period can vary dependent on the property, but once you reach the end of the renting period you will then have the option to buy the home outright or buy part of the home through a shared ownership scheme. Should you decided not to invest in the property, you will not be able to continue to rent and will have to leave.
What Are The Conditions?
If you’re considering using the rent to buy scheme, you will only be considered eligible if you meet the following criteria:
- You must be a first time buyer or unable to afford a home on the current open market
- Your household must earn less than £60,000 a year or £64,300 a year if you live in London
- You must have a good credit history
There may be additional criteria for you to be considered eligible, however, these vary depending on your local authority.
Is This Scheme Right For Me?
The rent to buy scheme cannot be used to purchase any home on them market. There are specific homes that are built to support this scheme, so the first decision you will need to make is deciding if the homes available are suitable for you or your family’s needs.
The major benefit for most buyers is that its gives them the opportunity consistently save long-term and potentially buy a home that would normally be outside of their budget.
One of the drawbacks to the scheme is that with the length of the renting period, the price of the home could rise considerably beyond your budget. You could also find yourself in hot water if the worse were to happen and you were unable to make the monthly repayments. Tdhis could lead to eviction and loss of your deposit.
The rent to buy scheme is great way for first time buyers to get on the property ladder. Deciding whether it’s right for you depends on what is available in your area. This scheme does offer a great opportunity for those on a low income looking to save some money, however, the only way to determine if it’s suitable for you or your family Is by taking a good look at the fine print, considering all of the potential costs and figuring out if you would be able to comfortably make the monthly payments, even if prices rise.
