Me and DH are wanting to buy our own house, but will need to move out of this (rented) house soon as well (landlord is being awful). We have seen these rent to buy schemes where we would rent a house and buy it after a couple of years. Does anyone have any experience of these?
I bought a shared ownership property, where I have a mortgage for half (minus deposit) and rent the other 50% at a subsidised rent. This is through a housing association and has been a fantastic way to get on the property ladder. Not sure I would do something privately though, the paper work would have to be airtight to avoid future problems.
I think the problem with this is that you are tied in to buying a new-build property at a (often) very inflated price. I think you would be better off buying conventionally. If you think you will be able to afford a house in a couple of years but not yet, it is probably better to wait. These schemes are a way of developers filing houses that no one wants.
With the scheme I am looking at, you can buy any house. The man from the scheme has basically told me to go away and find a house. I've to put him in touch with the seller and he will negotiate the final details. He said not all sellers will go for it, but round here, houses can be on the market for years, and there are quite a few people who end up renting against their will because nobody has the money to buy, at least this way they would be getting an income and eventually a buyer. Lots of properties with no upward chain round here as well.
I wouldn't like a new build tbh.
It just seems daft to move in a couple of months to rented, and then again in one to three years (depending on how quickly we save up) and all that time have the risk of being evicted on the landlords whim.
We would be buying (and renting in the meantime) at market rates, although our rent would have some on top to pay into our deposit.
Houses we are looking at start at £65,000 needing renovations and go up to about £120,000 for a newly modernised property. There was one new build, but it was a barrat box with a postage stamp garden and much more expensive than the nice solid ex council houses we were looking at for half the price. We would need a deposit of 3% of the property value to move in and begin the renting part, then 15% to buy it.
We did consider buying the house we are renting now, but it is only two bedrooms and ideally we would like a spare room that we could put one of the kids in as they get older.
I think it depends how fairly the properties are priced both in terms of rent and in terms of asking price. If you are renting for a couple of years, I would worry that the LL, thinking you may be buying at the end of it, just won't bother maintaining it as the price has already been agreed.
I do wonder how many homeowners would want to use this service: most want to rent or sell, this seems to be a halfway house that doesn't really offer them very much. Can't think what's in it for them - maybe a few people are tied into mortgages for a couple of years but that has to be a minority. What happens if they fall out with the tenant because of, say, non-payment of rent and that registered offer to sell to them still stands?
That aside, if you can find a house that's right for you and fairly priced, it could suit your circumstances very well. But, the general feeling is that prices are going to fall rather than go up and who knows how easy it will be to find a mortgage when you want to buy? You could find that you have either paid too much or that you can't get the funding to purchase the house.
It's all in the contract. The rent can't go up and the price of the house is fixed at the valuation before you move in, so you can improve it and maintain it as if you owned it.
At the end of the term (five years I think) you can walk away if you want or you can buy, or you can sell the house on.
You can do those things during the term as well I think. Plus you can buy at any point, as soon as you have the full 15% saved for the mortgage.
The man I spoke to said the sellers tend to be people who have inherited a house or who have an extra property for whatever reason. We have houses in our street that have been on the market for five years, so they would have been better off doing this kind of thing.
If we don't pay rent, we get evicted, same as if we didn't pay noraml rent or mortage, but the benefit to us is they can't evict us for no reason.
Our side of that would be being able to maintain it ourselves - our house atm has no working oven. I would have bought a cheap electric oven months ago, instead of cooking in a bedsit oven like some kind of student, but we are stuck with the landlord dragging their feet over everything.
The problem for a seller is that from my (very scant) knowledge of the law, if you sign an agreement that offers you first option to buy the house then it is incredibly difficult to have that overturned. There has been very well-known case law on this between family members where the offer has only been verbal and, after a family argument, it still holds. So if you have a tenant who stops paying rent, does that necessarily nullify his right to buy the property? It sounds as if the seller could be over a barrel.
I've had a look on one of the websites and the prices for the two London properties, both in areas I know a little bit, looked quite toppy both in terms of rent and asking price.
My friend had trouble with an flood insurance claim. They couldn't/wouldn't agree on whose insurance the claim should be made...watch out! It was sorted but only after a heck of a lot of agro' that they didn't need.