Rent-to-buy Options For Purchasing Your Home

Despite the recent vote-buying budget which saw Stamp Duty suspended for properties

priced under 250.000, options for many people looking to buy their first home are still limited. The banks continue to display a lack of confidence in the UK housing market and this is reflected by their reticence to lend large percentage loans against house purchases.

This leaves first time buyers, or buyers who have little equity in their existing property, still looking to raise a large deposit towards their property purchase. Saving is the traditional way to make up the shortfall between what you have and what you need, but with the average house price in the UK now over 160.000, buyers could be looking at trying to find in excess of 40.000 to cover the deposit and associated costs, before they even start to look at properties.

Thankfully, there is a solution. Rent-to-buy schemes are being introduced throughout the country, to enable property purchasers to rent the property of their choice, with an option to buy after a fixed period. The properties included in these schemes are listed by private vendors and are attractive, freehold, residential properties offered on a full ownership basis, and not to be confused with any government shared-equity schemes.

The key advantage of a rent-to-buy scheme is that, as a potential homebuyer, you live in your selected property for a typical period of 3-5 years. During this time you are able to discover if it is the right property for you and, whilst doing that, the rent that you are paying counts towards (or is discounted against) the amount of deposit that you need should you decide to proceed with the purchase of the property. The ultimate purchase price of the property is determined before you move in, and this allows for additional equity growth during your rental period (should prices rise), which then facilitates better and cheaper mortgage options when you decide to buy.

The main categories of homebuyers that are already successfully involved in rent-to-buy schemes are;-

* Those who have found it difficult to raise the full amount of the deposit particularly in the Home Counties and South East of England where prices are way above the UK average.

* Families and individuals who were previously renting and saw that it made more financial sense to pay the same amount of money to own their own home.

* People who may have a poor credit rating, and have found it difficult in the past to get large LTV mortgages.

By investigating the current rent-to-buy opportunities in your area, you open the door to more accessible home ownership, and extend the options for buying your own home.

by: Oliver Darraugh

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