A division of Ronan Property Services

Examples of a typical Rent2Buy scheme

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Register your interest in order to find a rent2buy property. It is FREE to register. As soon as a property becomes available in the area of your choice you will be put in touch with the investor who owns the property so that you can discuss everything in full and arrange to view the property.

Complete a reference check form as instructed by the property investor who owns the particular property. You will need to do this quickly as these properties are oversubscribed and go very fast. Reference checks will then be carried out and you will be advised as to your suitability as a tenant/buyer. The payment of a small charge will be requested at this stage for the services of the reference checking agency. Once this is done the property owner will arrange for you to inspect the property unless you have already done so.

Once you have been accepted for a particular property that you have applied for, the owner of the property will send to you by email or by other a spreadsheet or documents that confirm the details of your financial commitment in full, and also if applicable the fixed sale price and other financial information.

When you have confirmed acceptance of this information the letting can go ahead. At this stage you will be asked to pay the Option to Purchase fee of approximately £300 which is not refundable.

TWO EXAMPLES OF RENT2BUY SCHEMES*

Scheme One, Fixed Price

The price of the property is fixed for a maximum of three years.

You may exercise your option at any time between two years and a maximum of three years in the property.

The rent is also fixed for the three years so you can budget with confidence.

You will need a small deposit equal to 2% of the agreed sale price. In addition you will pay an agreed monthly amount towards your deposit for a mortgage when you decide to exercise your option to buy. Both of the above will be deducted from the agreed sale price therefore providing you with a deposit as your chosen mortgage provider will base their mortgage offer on the current market valuation at the time. If the valuation is higher than the fixed sale price you may get a cash back. However there could also be a shortfall which you would have to make up as house price valuations can not be guaranteed. However as your purchase price is guaranteed you can avoid any shortfall altogether by paying more into your deposit fund each month if you are able to do so.  

Although the total monthly payments over a shorter period are higher than scheme 2, the overall cost of purchasing the property is considerably less in the long term

Scheme Two, Flexible Price. 

This scheme is over a longer period of six years. The price of the property is estimated but not fixed and will be based on the current market valuation by a chartered surveyor three months before you exercise your option to buy at the six years stage.

The rent is higher than for scheme 1, but is  fixed for the full six years.

You will need a small initial deposit equal to 2% of the projected base rate property valuation price at the three year stage. If you do not have the full deposit, we may in certain circumstances consider a lesser amount and tailor the remaining payments around your needs and circumstances. Unlike scheme one you will not need to pay an additional monthly amount towards your deposit . However in exchange for a higher rent you will receive a cash back based on a share of the growth in the increased value of the property . This together with the refund of your initial deposit should provide  sufficient funds for a deposit with a mortgage lender and may even result in a cash back.  The  financial share of the growth in the valuation will be considerably more than the increased rent payable. As you are aware mortgage lending products and criteria are constantly changing therefore we can not give any guarantees as to what will be available in the future.     

The example below is based on the present property valuation and what can be projected in the future. You can exercise your option at any time after the end of the fourth year and finally at 5 years 9 months in time to complete by the sixth anniversary by which time you should have arranged a mortgage. Based upon today’s valuation of the individual property you are interested in, the increased value would be,

Increase in value after 3 years 15% Tenant/buyers share 2.45%

Increase in value after 4 years 20%  Tenant/buyers share 3.55%

Increase in value after 5 years 25%  Tenant/buyers share 5.41%

Increase in value after 6 years 30%  Tenant/ buyers share 7.61% (exercisable at 5 years 9 months).

Live Rent Free For Two Years.  The above share of the increased property value, is in effect equivalent to approximately two years refund of rental that you have paid. Now that is a bonus.

Scheme 2a, Low Start Rent

This is an extension of scheme 2, where a lower rental is charged at the start and then raises by small affordable increments every 12 months over the six year period. The deposit required is reduced to £1,000. The overall effect is to pay the same amount of total rent over the six year period. This option is of benefit where earnings are going to increase following return to work after further education, training, pregnancy etc.  

* The above schemes are used on our own properties and are recommended to other investors who have property available for rent2buy on this site. These investors may have a variation of the above schemes or their own version of this theme.

We will always be happy to discuss your requirements and provide advice as what will fit in with your present financial circumstances. Fill in and submit the contact form on the Contact Us page and we will email you back as soon as possible. Please include your telephone number and the best time to telephone you back and a consultant will do so if necessary. Please note we will not normally reply by telephone to mobiles due to the high costs involved.

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Please Note: The Rent2Buy schemes referred to are based on the originals used directly by the operators of this website. They are used as examples for your information, however Rent2Buy properties are offered by a large number of individual investors who may use variations of this theme. Full details will be provided to you when you express an interest in a featured property. Each investor has signed up as one of our Associates before being allowed to use the facilities of this site and has agreed to a set of rules and ethical guidelines for your protection. Click here to view this agreement.
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