Rent to own is an innovative service designed to help vendors to sell their home for the price they want/need as well as allowing tenants to become home owners.
I’m sure you yourself or you certainly know of someone bitten by the recession in 2007/2008, often meaning that if you bought a property around this time you have found yourself in a position of negative equity, leaving you feeling trapped. The recession hit many people in many different ways, also affecting people with aspirations to get onto the property ladder which soon became wishful thinking. We designed our rent to own service around finding solutions for both sellers and buyers. It allows sellers an exit strategy whilst also allowing tenant/buyers the opportunity to own their own home. For Home owners/ Landlords it is the easiest and most profitable way to sell a house is to an existing tenant. After all they already live in the property and you don’t have the hassle of it being empty for periods of time not producing any income and all the viewing's that go along with it. Tenant buyers treat the property as their own, after all it will be one day. This means fundamental differences in the way they treat your property compared to a traditional tenant.
Home Owners & Landlords
So How Does It Work?
The rent is paid on time every month in addition to a monthly deposit top up. This deposit top up is kept in our secure client account and builds up as the mortgage deposit to be used at any time within the option period. If the tenant stops paying the rent they not only lose the option to buy the property but also any money in the client account. Therefore this is a huge incentive to keep paying the rent and the top up. The tenant buyer is responsible for all maintenance costs, it is also very common for the tenant buyer to improve the property by replacing kitchens, bathrooms, boilers, carpets etc. So if the tenant buyer does not exercise the option and purchase the property, they have improved the value of your property for you and we will then find another tenant buyer. Voids – Become a thing of the past, the tenant buyer is saving up to purchase the property so is less likely to move like other tenants.
How Do You Set The Purchase Price?
The option will be exercised at some point in the future, at least 5 years and up to 10 years it’s very difficult to set a reasonable and fair price for all concerned. The landlord wants it as high as possible, the tenant wants it as low as possible and this is where our expert advice and reasoning comes into play. We have to see both sides and come up with a fair compromise. On average 3% per annum increase is in line with historic data from nationwide.co.uk. The purchase price has to be realistic and the property has to value up at the agreed price at the end of the option period to give the tenant buyer a chance of purchasing the property.
What Is The Monthly Option Fee?
As previously mentioned the tenant buyer is paying a monthly deposit into our secure client account which in time can be used as the deposit on the mortgage to purchase the property. This is a huge incentive for the tenant buyer to keep paying the monthly rent and also adhere to the conditions of the AST as breaking any clauses would lose the option to purchase the property along with any monies saved up in the deposit client account.
What Is The Exit Strategy?
The tenant buyer can purchase the property at any time within the option period for the agreed purchase price. The purchase price will be on average 10 - 15% more than it is worth in today's market, giving you a nice profit. Couple that with the consistent monthly rent, lack of voids, no maintenance and no sales costs means Rent to Own is a very profitable way to make money in property.
Who Is Rent To Own For?
Rent to Own is a great mid to long term exit strategy suitable for accidental landlords who wish to sell their property but are leveraged quite highly. It is also a good strategy for portfolio landlords who wish to have a structured disposal strategy and take advantage of their annual CGT exemption.
Tenant & Buyers
So How Does It Work?
Rent to own is a very simple and easy way to get on the housing ladder for tenants that can't get a mortgage for various reasons such as:
Another Way To Own Your Home - What Is Rent To Own?
- Not Enough Deposit Saved Up
- Poor credit rating, CCJ, defaults
- Self-employed, less than 3 years accounts
- It is not a new concept and has been used in property transactions for hundreds of years, it's basically buying a house over an extended period of time, a bit like try before you buy. We are not reinventing the wheel, just putting a modern spin on things to help tenants purchase their dream home.
Another Way To Own Your Home - What Is Rent To Own?
It is not a new concept and has been used in property transactions for hundreds of years, it's basically buying a house over an extended period of time, a bit like try before you buy. We are not reinventing the wheel, just putting a modern spin on things to help tenants purchase their dream home.
How Does It Work?
After viewing the property you pay an initial low deposit to secure your Rent To Own property, you can normally move in within a week. You pay a set monthly rent and a “deposit top up”. The deposit top up is paid into a secure client account with full client protection and fidelity insurance so no need to worry about the deposit. The monthly deposit top up builds up an amount which goes towards your mortgage deposit when you come to purchase the property within the agreed time. You can buy the property in week one, year one or any other time within the agreed time period. The purchase price is agreed, BEFORE you move in. This does not alter within the agreed time period under any circumstances. You will benefit from any increase in the house price. You can even sell the property before the notice period expires and benefit from any profit. Each month the top up fund is increased thus giving you more equity in the property.
What Are The Benefits?
Only a small amount of money is needed to move in. We do ask for small amounts which will depend on the type of property and deal that is available at that time. BUT you can't expect to buy a house for nothing can you? We need to know that your serious and committed to buying the property. Rent is fixed for a set period of time, at least 5 years and up to 10 years. The price of the property is fixed TODAY. It can't be raised at any point within the agreed time scale.
- No credit checks – Guaranteed.
- No mortgage required to get started.
- You save up for the deposit on a monthly basis, so you don't have large sums to pull out initially. Decorate, improve, add value as you wish to the property, and basically treat it as it's your own home because it will be soon. You can just walk away if your circumstances change and providing you are not in any arrears and the property is in the same or better condition, it will not affect your credit rating.
What Do I Do Next?
- You choose the property you want to view from our list
- You view the property
- We agree the figures and draw up all the legal paperwork at NO COST to yourselves
- You pay the initial small deposit
- Sign the contracts
- You move in and enjoy YOUR home and treat it as your own