5 min read
The Rent to Buy scheme is a government initiative designed to help aspiring homeowners transition from renting to buying their homes. If you've been struggling to save for a deposit while paying rent, this scheme might be for you.
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Rent to Buy (also known as Rent to Save or Rent to Own) is a government scheme designed to help first time buyers with the transition from renting to buying a home by providing subsidised rent.
Rent to Buy helps tenants in England (excluding London) and Northern Ireland save for a deposit to buy a home by offering rent on a newly built property at a discount for up to five years. This is normally 20% below market rent.
Rent at a Discounted Rate: Initially, you rent a newly built home at a reduced rate, typically around 20% lower than the market value. This rental discount allows you to save extra money each month.
Save for a Deposit: The money saved from this discount can be put towards a deposit over a period of 5 years. During this time, you will have the opportunity to accumulate enough savings to make a down payment.
Option to Buy: At the end of the rental period, you have the option to buy the property. By then, the goal is to have saved enough for a deposit, making it easier to secure a mortgage. You will be free to make an outright offer, or look into a part rent part buy scheme, such as Shared Ownership.
Different housing associations use different names such as Try Before You Buy, Rent Save Buy, Rent to Own, Intermediate Market Rent and more, and will have different terms – so make sure you check the specific terms before signing up.
You are a first-Time Buyers: This scheme is primarily aimed at those who are buying a home for the first time, however you could be eligible if you used to own a home but now can no longer afford to buy one.
Your household earns £60,000 a year or less: This is the combined total income for your whole household, where it is just you, you and your partner or you and a friend.
You have a good credit history: Applicants usually need to pass a credit check to qualify for the scheme.
However, there are further criteria depending on the housing association the property is offered through. Priority is normally given to certain groups of people, such as existing housing association tenants and council tenants, or people that fit with local priorities, as well as first-time buyers. To check whether you qualify, visit the government’s Rent to Buy page.
If you don’t qualify for Rent to Buy, read our handy guide on all the first-time buyers schemes available
Affordability: The discounted rent makes homeownership more attainable for individuals and families who may otherwise struggle to save for a deposit.
Long-Term Planning: Provides a clear pathway to homeownership within a set timeframe.
Financial Stability: Encourages financial discipline and planning.
Not limited to one first-time buyer scheme: You can put your savings into a Lifetime ISA to take advantage of a 25% boost for your deposit and can open up the possibility of Shared Ownership.
Availability: The scheme is typically available for newly built homes, so options may be limited depending on your location and you may have to join a waiting list.
Commitment: While renting, you are committing to the goal of buying the property at the end of the period.
Affordability: if house prices rise over the time you are renting, they might rise over what you can afford. The Rent to Own scheme in Wales tries to tackle this by offering 50% of any increase back to go towards your deposit.
Offered in Wales, Rent to Own is a slightly different first-time buyer scheme. With Rent to Own, you rent a property and pay the going rate for up to five years. Then, after two years, you have the option to buy the property. If you do decide to buy your home, you will receive 25% of the rent you have paid and 50% of any increase in the property’s value since you moved in to use as a deposit on the purchase.
Unfortunately, properties in London are excluded from the Rent to Buy scheme, as there is a separate first-time buyer’s scheme called London Living Rent.
The London Living Rent scheme is essentially the same as Rent to Buy: you rent a property for less than market rate with the idea that you put these savings towards your deposit. However, with London Living Rent, tenancies are for a minimum of three years and during that time you are prioritised for shared ownership homes so you can get on the housing ladder.
The Mayor of London publishes benchmark London Living Rent levels for every borough in the capital, which is updated annually. These benchmarks are based on a third of average local household incomes and then adjusted for the number of bedrooms in each home. Find out more about London Living Rent.
If you decide that Rent to Buy is a good option for you, you can search for local councils or housing associations that have Rent to Buy homes using the government’s shared ownership scheme service.
In summary, the Rent to Buy scheme offers an innovative route to homeownership, especially for first-time buyers who need a little extra help saving for a deposit. By renting at a discounted rate and saving the difference, you can work towards owning your home in a financially manageable way.
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