Rent to Buy

Rent to Buy (RTB) is a government scheme that allows individuals to rent a new home at a reduced rental amount while providing them with the opportunity to buy the home during that time - whether through Shared Ownership or via an outright sale.

Rent to Buy is sometimes referred to as Rent to Save or Rent to Own.

This scheme is designed to ease the transition between renting and buying by subsidising a percentage of the rent. When they join the scheme a buyer rents a property at below market value for up to five years, allowing them to use the remaining amount to save for a deposit. After the end of the period, the renter either has to purchase or leave.

How does Rent to Buy work?

If you want to own your home but you’re struggling to get a deposit together, Rent to Buy is an ideal path for achieving home ownership.

Provided you’re a working household, you can move into a brand-new Rent to Buy property and rent it on an Assured Shorthold Tenancy basis for up to five years. During this time, you’ll pay a reduced rent of 80% of the current market value, with the other 20% going towards a deposit you can use when you look to purchase.

During the tenancy, you have the option of purchasing the property on either a Shared Ownership or outright sale basis. If you’re looking to buy through Shared Ownership, you can do it between year one and five. If you’re buying on an outright sale basis, you can do so at the end of the five-year fixed period.

What are the benefits of Rent to Buy?

As a government scheme, Rent to Buy is a unique system that provides a wide range of benefits, particularly for those struggling to get on the property ladder. The benefits of Rent to Buy include:

  • You can move into a new home while still saving towards the purchase of your own property.
  • You pay reduced rent on a property - usually 20% less than the standard market value.
  • You can get used to your new surroundings, safe in the knowledge that you can buy your rental property.
  • You have the flexibility of choosing Shared Ownership or Outright Sale for your final home purchase.

It’s important to remember that Rent to Buy is a long-term commitment and if your circumstances change during the RTB period, you’ll be unable to buy the property.

You also typically have to buy the property at the value it is when you buy, not when you begin renting. That means if prices increase between the beginning of the rental period and the purchase time, it may cost you more than you think.

Finally, Rent to Buy is not available on every property or every location, meaning you may not be able to buy in your dream area. That said, if it is available on a property in a desirable location, it’s a great opportunity to get into homeownership.

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Who is eligible for Rent to Buy?

If you’re looking to enter the Rent to Buy scheme, it’s important to check that you’re eligible. There are several criteria you have to meet including:

  • Register with the Help to Buy scheme
  • Be part of a working household
  • Not be a homeowner
  • You plan to live in the property

An important thing to remember is that the Rent to Buy scheme isn’t necessarily aimed at those who can’t buy a property but at those that can’t get a deposit together because they’re renting.

Your household income typically needs to be under a maximum limit - usually £60,000 - and generally you have to be a first-time buyer, although this may come with exceptions.

Finally, you require a good credit history to demonstrate that you can afford the rent, as well as the future mortgage payments.

When you’re ready to start your journey to becoming a homeowner but don’t have the deposit for a Shared Ownership property, Rent to Buy is the ideal first step. At Platform, you can speak with us and we’ll help you get started.

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Frequently Asked Rent to Buy Questions

The costs involved in a Rent to Buy scheme are similar to that of the traditional letting process. The upfront costs are as follows:

Deposit: You will have to pay the equivalent of five weeks rent as a deposit, which is then held in the Deposit Protection Scheme (DPS).

Rent: You will have to pay the rent for the remainder of the month from the start of your tenancy sign-up date, alongside one month’s rent in advance.

You may have to pay a reservation fee to reserve your property but this is typically deducted from the first month’s rent.

During your tenancy, you’re responsible for all of the utility bills associated with the property while you’re a tenant. This is generally council tax, water, gas, electricity and internet.

When you formally purchase the property as part of the Rent to Buy scheme, you’ll also take on the usual costs associated with purchasing a property - such as Stamp Duty, conveyancing fees, valuation fees and any administration costs such as the mortgage application.

The answer to this question depends on your own individual circumstances but if you have a good credit score and reliable income each year, Rent to Buy is a practical way of getting on the property ladder if you cannot save enough for a deposit.

The most important consideration is your personal timeline. While five years may be plenty of time for you to save, house prices could rise during that period which means you pay more. If you buy sooner, however, you have less time to take advantage of the discounted rental rate and build up your deposit.

You also have to consider availability. The availability of Rent to Buy properties depends on the local authority or housing association you’re working with. While the scheme offers many benefits, you may not have the same amount of choice as you usually would in the open market.

If you do find a suitable property, make sure that you’re truly happy with it if you’re considering Rent to Buy. This is a scheme designed for the long-term and if you compromise on area or size, you risk the success of your Rent to Buy agreement if you quickly outgrow it.

If an existing homeowner is experiencing exceptional circumstances - such as the breakdown of a relationship - then they’re eligible for the Rent to Buy scheme. In these exceptional instances, it’s down to the homeowner to demonstrate they're unable to purchase a home on the open market and require the support of Rent to Buy.

This depends on the scheme but generally, while you’re renting, repairs are taken care of by the housing association. It’s your responsibility, however, to keep the property in good order, ensure the property is well-maintained and the garden is cared for.

While you’re in the Rent to Buy agreement, any service charge is included in the rent. Once you purchase the property, however, you may have to pay a service charge which is discussed with you prior to the purchase.

Under your Rent to Buy agreement, the service charge is inclusive of your rent.

Once you purchase your home in the future on either an Outright or Shared Ownership basis, there may be a service charge payable which will be discussed with you at the time.

The typical tenancy agreement that you will see on a Rent to Buy property is an Assured Shorthold Tenancy, which runs on a periodic basis.

Generally, the tenancy agreement is for a minimum period of 12 months and a maximum period of five years.

Yes. If or when you decide to end your tenancy, we will ask you to give us one calendar month's notice as a minimum. This will need to be given in writing.

This agreement is signed at the start of your tenancy confirming your intentions to save for a deposit and purchase the property in the future where financially possible.