There’s nothing like owning your own property, and the government’s Rent to Buy scheme is making home ownership a reality to many who thought it impossible. From a landlord’s perspective, Rent to Buy tenants are potentially the best you’ll have as they literally want to invest in your property. Find out how Rent to Buy tenants are the best tenants – and how the scheme works – below.
How does Rent to Buy work?
Rent to Buy is a government scheme that is designed to make the transition from stable, subsidised renting to home ownership an easy one that ultimately proves advantageous to both landlord and tenant. The property that tenants will rent is a new build that is rented for around 20% less than the market value for up to five years. The theory here is that tenants are paying reduced rent in able to put away savings to eventually buy the property.
One of the main upsides for a landlord? There’s limited availability for this scheme, so tenants will likely be ones who really want the tenancy and will work hard to prove themselves as good renters – and may very well offer a good price to buy the property when the time comes.
Will this work for me as a private seller?
This is scheme is almost perfect for private sellers, having very few downsides for both seller/landlord and renter/buyer. Why? Because as a private seller or property developer, you can get in on this scheme, bringing in an income to pay your own mortgage whilst at the same time, working towards a sale. As there is usually a set time to offer a tenant first refusal on the property, it means you’re pretty much guaranteed a date of when your property can be sold – allowing you to plan your property portfolio too.
Tenant Restrictions Still Apply
One major benefit for landlords is that although tenants may someday own the property, they’re still under the same restrictions that they’d as if they were privately renting any other house. Pets, cleanliness and other limitations still apply to tenants, which means that they’re either buying a property in fantastic condition, or if you have to re-sell after the renting period is over, you can advertise your property as one well taken care of. So your tenants will ultimately make the selling process easier for you than most.
Tenants must be eligible for the scheme
One of the main caveats for the scheme is that tenants can’t earn more than £33,000 a year, must be first time buyers, and must have a good credit history. Three things that work in a landlord’s favour; your tenants will most likely therefore be fiscally responsible individuals who save for rainy days and are looking to do whatever it takes to own their first property – perfect for landlords.
Need more advice on Rent to Buy?
A scheme so advantageous to that it brings responsible tenants to the doorsteps of landlords – is there more to it than that? If you have any other questions, contact iLet today to find out how we can help you on your Rent to Buy journey.