Rent to buy scheme?

leakyboots

Excuse my naivety, just wondering what's the story with this? Someone mentioned it to me a while back and I don't know exactly how it works.

I might have the complete wrong end of the stick am I correct in saying it's a scheme where what you pay in rent can be put towards a mortgage if you buy the property?

Basically, we're after moving into a nice house that we're renting and there's a chance I would consider buying it.

Is it something you work out with the bank and landlord? Is there a charge if you back out of it?

Thanks for the help!

Baby01032012

leakyboots wrote: »

Excuse my naivety, just wondering what's the story with this? Someone mentioned it to me a while back and I don't know exactly how it works.

I might have the complete wrong end of the stick am I correct in saying it's a scheme where what you pay in rent can be put towards a mortgage if you buy the property?

Basically, we're after moving into a nice house that we're renting and there's a chance I would consider buying it.

Is it something you work out with the bank and landlord? Is there a charge if you back out of it?

Thanks for the help!

It's a scheme usually run by developers. It allows purchaser to build up deposit by using rent with option to purchase at agreed amount after certain no. of years. I presume you're in a private rented house. What makes you think landlord or bank would consider this as an option even if landlord wanted to sell in first place. Why would he wait 3 or 5 years or agree a price now.

_Kaiser_

Looked into this a few years ago and it seemed very shaky.. off the top of my head:

- Who's liable for the maintenance of the property during the "rental" phase
- What if the bank decides the house isn't worth the price originally agreed and declines the mortgage
- How exactly does the rent count as a deposit/what happens to it in the meantime

I do remember asking several estate agents who spun me different stories and 2 solicitors who advised me to stay clear as these questions had no clear answers.

witchgirl26

There are some problems with this kind of scheme. Firstly you agree the price you pay at the start of the rental period so it doesn't go on market rates. Now it could work out that you get a bargain but I think with the way prices are now, most developers won't offer this as it's less likely to make them money then if they rent now and just sell later. And if you decide not to buy, then you forfeit all the money that you put into the "deposit" through rent.

As Baby01032012 it's a scheme usually run by developers and not by individuals but I haven't heard much about it since the property market has gone down.

the_syco

The theory;
You agree the property will cost €200k. You rent for 5 years. This rent is used as s deposit for the cost that was agreed when you started to rent.

The reality;
You agree the property will cost €200k. You rent for 5 years. The bank doesn't accept the rent as a deposit. The bank values the property at €150k, and so you must find the other €50k yourself. Back to square one.

Have a look through here, and you'll find a few people who have done it, and warn against it.

miezekatze

This was an option when we decided to rent our current apartment, however the purchase price of the apartment would have been higher than what they were going for at the time and the monthly payments were a good bit higher than what we paid in rent. Plus there are the potential issues mentioned by previous posters. I don't think this is a great scheme to be honest.

An anecdote.. A relative of mine tried to sell a house via rent to buy because the buyers (a couple with 2 kids) couldn't get a mortgage, that was in another EU country but the idea is the same. The man died suddenly just a few years later and the wife could no longer afford the payments, but didn't want to accept that they could no longer buy the house and live there either. They had done some work to the house and invested some money. Trying to sort out this mess was a major nightmare for my relative (and the tenants too) and it took a few years to sort all this out.

whitepigeon

Since 2012 we rent an appartment from the council under the rent to buy scheme & affordable housing (two schemes together). We decided to buy our property and we've applied for a mortgage three weeks ago in BOI and had no reply. How long does it take to get a mortgage approval? BOI employee was confused with the scheme but it seems to be too long. Does anyone have experience of it?

Moonbeam

If the council is running it then it is a different matter,it would be reliable.
Did you apply for a council loan?
It is a while since I replied for mortgages but I heard back within a few days in principal.
I would ring them and follow up.

whitepigeon

Thank you for your reply Moonbeam - you are better then the bank is we applied for a bank loan first. The bank employee said it takes 5-6 working days to get an answer but its almost three weeks now. I rang them on Friday, they promised to call me back but still have no update.

Moonbeam

Ring them again and be persistent.