What is Rent to Buy?
We understand how difficult it can be to get a foot on the property ladder these days. Too often people are forced into completely changing their lifestyle or making big sacrifices, like moving away from family, friends and work, just to be able to save for a deposit to buy their own home. For many, the idea of ever being able to afford to buy in London feels out of reach.
Rent to Buy offers people the chance to rent a home at a lower rent (with a discount of 20%), for a period of 2 years, helping them save for a deposit over time to purchase the home through Shared Ownership.
Peabody New Homes does not currently offer Rent to Buy.
How does Rent to Buy work?
Rent to Buy gives you a structured path from renting to owning your own home. It can be broken down into the following steps:
Step 1: Find a Rent to Buy home
Choose a Rent to Buy property that fits your needs and meets the eligibility criteria for the development.
Step 2: Rent at a discounted rate
You rent your home at around 80% of the market rent, giving you a built-in saving each month compared to renting privately.
Step 3: Save towards your deposit
During your rental period you will agree a sustainable savings plan to help you build a deposit.
Step 4: Prepare to buy
While renting, you can plan ahead by speaking to a mortgage advisor so you’re ready to buy when the rental period ends.
Step 5: Buy your home through Shared Ownership
At the end of the Rent to Buy period you can purchase a share of your home using your saved deposit and a mortgage. You will own a share of the property and pay rent on the remaining share and have the ability to buy more over time.
How much could I save with Rent to Buy?
Rent to Buy is designed for people who are earning enough to qualify for buying a home through Shared Ownership, but have not yet been able to save enough for a deposit.
You can rent a home while saving for a deposit during the 2 years you're renting with us. See how much savings you can make to contribute to your deposit.
Example: 1-bedroom apartment
Minimum annual household income - £45,000
Cost of your home - £380,000
Reservation fee - £99
Five weeks' deposit - £1,270
Market value rent (monthly) - £1,400
Monthly rent you will actually pay (-20%) - £1,100
A 20% discount on your rent means you can build up savings of £7,200 in just two years.
Am I eligible for Rent to Buy?
Eligibility will vary depending on which development you are looking to buy in. However, there are some general criteria that you must meet for every development.
- My household income is not more than £90,000 a year
- I don’t own a property already
- I live or work in the area i am hoping to buy
- I am willing to agree with you a sustainable amount I am able to save every month whilst I am renting my new home
- I can afford the monthly Shared Ownership costs at the moment, but don’t currently have a large enough deposit to buy through Shared Ownership or outright
- I am able to show that I can obtain a mortgage based on my current credit report
- I am able to pass money laundering and fraud checks
- I am hoping to buy a home big enough to suit my current needs
- I am able to get a good tenancy reference from my current landlord
Buy your home with Shared Ownership
Once the initial rental period is over, you should be in a position to buy your home through Shared Ownership, using a combination of the deposit you have saved and a mortgage arranged by yourself.
Owning a Shared Ownership home, means you buy a share in the property and pay rent on the share you don’t own. You can buy as little as 25% or as much as 75% of the value of the property initially, and you’ll need to take out a mortgage to do this. Although you may be officially ‘renting’ a proportion of the home, legally you become an owner-occupier, not a part tenant.
Shared Ownership is a part buy/part rent scheme that makes it possible for first-time buyers to purchase a property with a smaller deposit compared to buying on the open market.
Frequently asked questions about Rent to Buy
Rent to Buy is an affordable homeownership scheme that allows you to rent a home at a discounted rate, usually 20% below market rent, whilst saving towards a deposit to buy a home in the future, usually through Shared Ownership.
Rent to Buy homes are for people who earn enough to afford buying a home but don’t yet have a large enough deposit saved.
It’s particularly good for first-time buyers and those currently renting privately who want a more affordable route into homeownership.
Rent to Buy in London and other high demand areas can help those who feel priced out of the market.
The rental period is usually up to two years, although this can vary by development. The length of the tenancy is designed to give you time to save towards a deposit and prepare to buy your home.
"We really wanted to stay in London and buying through Shared Ownership was the best way to make this happen. Everyone at Peabody New Homes was so helpful and very efficient, guiding us through each stage of the processes. From my initial phone call, they managed to book me an appointment for the following week. I was so impressed with the quality of the homes here."