No mortgage? No problem. With RTB365, save up for your future down payment while renting, and take over when you’re ready–or just walk away. It’s that simple. Rent to Buy with RTB365 offers enormous benefits.
Many people aspire to home ownership but believe they can’t due to obstacles like employment or credit issues. This can provide you with the opportunity to save for a deposit to go on and purchase the home in the future. The main attraction of the Rent to Buy scheme is the low barrier to stepping onto the property ladder, providing new-build and existing homes at flexible ownership terms.
There are a number of different names that are used for the Rent to Buy scheme depending on where you live. Also known as (a.k.a): ‘Try before you buy’, ‘Rent save buy’, ‘Rent to own’, and ‘Intermediate market rent’.
To be eligible for Rent to Buy, you’ll need to be in a working household. This means at least one person who’ll be moving into the property must be in full- time employment. Applicants will be assessed to ensure that they’re eligible for the scheme and that they can’t currently afford to buy a home on the open market.
All applicants applying for Rent to Buy will be financially assessed and required to enter into a Rent to Buy Option Agreement, confirming their intentions to use the benefit of the five-year reduced rent period to help them save towards a mortgage deposit. This will be monitored and assessed on a yearly basis throughout the five-year term.
To abide by the statutory requirements for renting property in the UK, all applicants over the age of 18 will be subject to the following checks:
• A Right to Rent check and fraud prevention checks to confirm that you have a legal right to rent a property in the UK. You will need to provide valid proof of your current address and photographic ID
• An employment reference and confirmation of the monthly household income
• Credit referencing to confirm that you have an adequate credit score to obtain a mortgage during the five-year period to purchase the property. Please be aware that we will be unable to proceed with your application if you’re subject to any Bankruptcy or County Court Judgements (CCJs) issued within the last three years
• A reference from your current landlord or letting agency (if applicable)
See more here.
Our Rent to Buy in the UK follows seven (7) basic steps.
Rent to Buy Properties
Our rent to buy service covers both residential (homes) and selected commercial units (incl buy to let).
The vast majority of available rent to buy homes are new build homes from in-house, pre-owned units from external sources (including auction homes). Occasionally, we acquire houses every month and/or quarter from homeowners who need to sell for one reason or another. Often times we remodel the homes to bring them up to date and up to insanely great shape for a new rent to own tenant / buyer like yourself to move into.
Rent to Buy Agreements
Usually the monthly rent on a rent to buy house with us is a bit higher than the monthly rent on a non-rent to buy house (because you’re paying for the chance to purchase the house or property at a pre-determined price which ties the seller down as well). Rent-to-Buy agreements consist of two parts:
i. a standard rental agreement and
ii. an option to buy.
No two RTB contracts are the same - Ours may differ slightly from what may be available elsewhere.
1. Rental Agreement
2. Option to Buy Agreement
The tenant-buyer cannot sub-let this property, without a written permission. The tenant-buyer cannot sell his option to a third party during the 5-year period under the same or different terms. The buyer’s right to purchase is valid as long as he/she does not delay his monthly payments. However, there is a provision for a small delay in payments during the option period.
We allow up to 5 years (60 months) rental period for this scheme - Non-renewable. After the time period has elapsed, rent to buy homes give you the option of buying the property outright or upgrading to a conventional mortgage. It is expected that you should have taken this unmatched 60 months period to save up substantial money, either from improved employment, business income or multiple sources of income.
If you choose not to purchase the property however, or are financially unable too, then you must move out of the rented accommodation after five years (60 months).
Monthly Rent (MR)
The annual normal rent is usually around 5-10% of selling property price. So for example, for our starter home of £120,000, the annual rent will be within £6,000 - £12,000 -- monthly rent being within £500 - £1,000.
Getting Started Money (GSM)
This is usually, 6-24 months of monthly rent (MR). So for the example above, the GSM for a £120,000 rent to buy home will be within £3,000 and £24,000.
Option Payment (OP)
This is usually a minimum of 20% of the Monthly Rent (MR). So for a monthly rent of £500, the Option Payment (OP) will be £100.
Buying Option at end of Rental
Anytime, you are ready to exercise your rights to buy, the OP and GSM are used as your home equity, but not the Monthly Rent (MR).
So for example,
The GSM for the £120,000 home with £500 monthly rent will be £3,000 (for 6 months option), £6,000 (for 12 months option), and £12,000 (for 24 months option)
Home Equity At Rental Expiration (HEARE) will be >>
a. OP + GSM = £6,000 (monthly OP of £100 times 60 months) + £3,000 (for 6 months) = £9,000 (represents 7.5% of the original property selling price)
b. OP + GSM = £6,000 (monthly OP of £100 times 60 months) + £6,000 (for 12 months) = £12,000 (represents 10% of the original property selling price)
c. OP + GSM = £6,000 (monthly OP of £100 times 60 months) + £12,000 (for 24 months) = £18,000 (represents 15% of the original property selling price)
Summarized in the attached table here, for both One & Two Bedroom Rent to Buy Houses.
At the end of the maximum of 60 months (5 years) rental phase, you are expected to exit, via any of the following options:
You are expected to pay the difference of the property in full to complete the sale, i.e.
a. £120,000 - £9,000 = £111,000
b. £120,000 - £12,000 = £108,000
c. £120,000 - £18,000 = £102,000
You use your Home Equity At Rental Expiration (HEARE) as a down-payment for a conventional home mortgage or pension mortgage or family mortgage with a traditional bank of your choice or even with us.
If you decide not to exercise your rights to buy the home you've been renting for up to 5yrs, then you are expected to vacate the property and you forfeit your GSM and OP (HEARE).
You forfeit your HEARE because it compensates for our inability to increase the monthly rent or market to sell the home for the entire period you were occupying the property, as you benefit from the stable rent and equity build-up up to 5yrs.
How do I register my interest or signup?