Laura Howard, Wednesday July 23, 2008
The crisis in the housing market has seen property sales hit a virtual standstill. Now the Government wants to kick-start the market with a new ‘rent now, buy later’ scheme - but will it prove to be a false economy for aspiring homebuyers? We take a look
Housing minister Caroline Flint has announced plans for a new scheme called ‘Rent Now Buy Later’.
Designed to bridge the gap between renting and buying a first home - a gap now growing due to lack
of mortgage funding coupled with high house prices - the scheme allows households earning less than
a collective £60,000 to rent a property at a discounted rate for up to three years.
At the end of the rental period, the occupants then have the chance to buy it.
The £510m scheme, managed by The Housing Corporation, is designed to give people who could
never otherwise afford to buy a home an opportunity to save for a home. Flint claims the scheme
will “promote long-term stability and fairness in the housing market.”
Yet she may not be aware that estate agents across the country are already employing similar ‘
try before you buy’ schemes in a bid to get the stagnant property market moving.
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Gerrards Cross-based estate agents Roberts Newby launched its own rent-to-buy scheme three
months ago in response to consumer demand. “We had people clearly motivated to buy and sell but who
were too nervous of the market to go ahead with either,” says the firm’s managing director Simon
Roberts.
“Then, one of our rental customers came to an agreement with his landlord - who was also
looking to sell - that he would buy the home at the end of the tenancy term. We took this
arrangement and made it official - so now we write the view to sale into the tenancy agreement.
This gives both parties peace of mind as well as a simple transition into selling and buying.”
Roberts points out that the only legal part of the document is the tenancy agreement - the
final sale is just set down as an understanding between the parties. That means that either party
can choose to opt out of the sale agreement. Some 10% of the properties on Roberts Newby's books
are now up both for sale and for letting under the scheme.
