Save for a Deposit with Lower Rent: London Living Rent & Rent to Buy Explained

We know that renting with all its very costly implications can make getting on the property ladder an impossible dream. But, with these renting opportunities including Rent to Buy and London Living Rent, it means you save at the same time as renting and eventually can get the keys to your own front door.

LONDON LIVING RENT AND RENT TO BUY

HOW IT WORKS

Funded by the Mayor, the idea behind London Living Rent is to help people switch from renting to shared ownership. It is designed for people who want to build up their savings to eventually buy a home through shared ownership. London Living Rent offers affordable homes for private rent on shorthold tenancies for up to three years.

Simply:

• Find a London Living Rent home that suits you and your needs
• Rent the home at a discount
• Save the discount for your deposit
• Buy shares in your home through shared ownership.

Discounted rental contracts can be renewed, if needed, for up to 10 years after the launch of each scheme; during which time, you will be able to gradually build up your deposit. When you’re ready, you have the option to buy the home you’ve been renting (or another eligible property) on a shared ownership basis. The good news about the scheme is that when you buy is flexible, and the housing association will support you to save during your rental stay, so you can buy at your own pace.

ANY QUESTIONS?

Do I qualify for London Living Rent?

To qualify for London Living Rent you must meet all of the following criteria:

• Your annual household income must not exceed £60,000
• You must live or work in London
• You must be unable to buy a home, including shared ownership, in the local area
• You must not own a residential property in the UK or overseas
• You must meet the minimum income required for your preferred property
• You must meet lenders’ general criteria to obtain mortgage finance.

The full eligibility criteria and priority policy for a particular development can be found on the advertised listing.

Can I move to an alternative London Living Rent apartment once my term has ended?

You can’t move to an alternative if you’ve completed the stated London Living Rent term (usually five to 10 years).

Must I save a minimum amount each month?

You are the best judge of what amount is affordable for you to save each month. By renting through London Living Rent you benefit from a below-market rent so will have the ability to save based on the minimum income requirement for your London Living Rent home. The more you save, the quicker you will be able to raise the deposit required to buy your first home.

RENT TO BUY

Rent to Buy helps tenants in England save for a deposit to buy a home by offering properties at a discount. This is normally 20% below market rent. The scheme is available in England, apart from London. Properties in London are covered by a separate scheme called London Living Rent.

ELIGIBILITY

To be eligible for Rent to Buy, you must be:

• In full or part-time employment
• A first time buyer
• Able to pay your rent and save for a deposit at the same time.

You may also be eligible for Rent to Buy if you are returning to homeownership following a relationship breakdown. A landlord may check your income and credit history to decide if you’re eligible.

HOW THE SCHEME WORKS

You apply to rent a property that is in the scheme. If you’re considered eligible, and the property is still available, it will be offered to you. Your initial tenancy agreement will be for up to two years. After that, if you need more time to save for a deposit, your landlord may agree to extend your tenancy. If you do not pay your rent on time or you don’t follow the terms of your tenancy agreement, you may not be allowed to stay in the scheme. You can buy a home as soon as you have saved up enough deposit and are able to get a mortgage.

HOW TO APPLY

If you live in England (excluding London), you can search for organisations that have Rent to Buy homes using the shared ownership scheme service. Properties in London are covered by a separate scheme that is called London Living Rent.

COUNCIL AND HOUSING ASSOCIATION HOMES

Some local councils and housing associations advertise Rent to Buy homes. Check the shared ownership scheme service or with your local council or housing association for more information. There may be extra eligibility requirements to apply.

BUYING A HOME

You can use the deposit you’ve saved to buy any home, including those available using an affordable homeownership scheme.

IF YOU WANT TO BUY THE HOME THAT YOU ARE RENTING

You may be able to buy the home that you’re renting if your landlord agrees. If your landlord decides to sell while you’re a tenant they must give you the option of buying your home first. The price you pay will be the property’s market value. This may be more or less than when you first rented your home. Check with your landlord whether buying the home you’re renting is an option.

BUYING THE HOME YOU’RE RENTING THROUGH SHARED OWNERSHIP

You may be able to buy the home you’re renting through the shared ownership scheme if:

• Your landlord agrees
• You’ve saved enough deposit to buy a share
• You can get a mortgage
• You meet the eligibility requirements.

Check with your landlord whether buying the home you’re renting through shared ownership is an option.

TICKING EVERY BOX

Greenhaus – the largest Passivhaus Classic Certified development in the North West – has completed, bringing 96 highly sustainable, affordable homes to Chapel Street in Salford.

The monthly cost of heating and hot water at Greenhaus is expected to be less than half that of a similar sized new build home with a gas boiler. Built to Passivhaus Classic Certified standard, the leading low-energy design standard, the nine-storey development provides homes that offer high thermal comfort and improved air quality, enabling a healthier living environment as well as lower bills. The homes incorporate a range of benefits for occupiers, including triple glazing, air source heat pumps and the latest in insulation technology, which contribute to higher thermal comfort and improved air quality. These features, in turn, contribute to a healthier living environment by reducing the risk of damp, mould and condensation.

Outside, residents will also benefit from electric vehicle charging points and a public square complete with landscaping to foster and encourage community spirit. Greenhaus is a mixed tenure development of one and two bedroom homes, including two accessible apartments on the ground floor. It comprises 11 homes for social rent, 13 homes for affordable rent and 72 homes available as part of the Rent to Buy scheme.

CASE STUDY

Kya Jones is one of the first residents to move into Greenhaus. The 29-year-old is a Senior Business Analyst in the tech sector and moved to Salford in 2019 from her home town of Liverpool to be closer to her job in Manchester city centre.

Kya had previously lived at another Salix Homes development – Artifex in the Trinity area of Salford – but was attracted to the green credentials, affordability and location of Greenhaus.

She explained, “The whole idea of Greenhaus with its eco-credentials, cheaper bills, health benefits, and not to mention the great location, really appealed to me. It ticks every box and I’m really excited about making Greenhaus my home.”

Kya has opted for a two bedroom apartment under the Rent to Buy Scheme. Rent to Buy is a Government scheme designed to ease the transition from renting to buying a home by providing a subsidised rent at around 20% below the market rate.

People are able to rent the properties for five years at the reduced rate, leaving room for them to save towards a deposit and then have the option to buy their home after the five-year period. Kya works from home regularly, so is using her second bedroom as a home office, but is also just a 20-minute walk from her workplace in Manchester city centre.

Kya added, “I like city centre living – I like being able to walk to work and to the shops – it suits my lifestyle, but the cost of an apartment in the city centre is just not affordable. With Greenhaus and the Rent to Buy scheme, I’m getting the benefits of the location, so close to Manchester city centre, but without the city centre prices. The cost of living in general has gone up such a lot, so I jumped at the opportunity to have a home where the outgoings will be significantly less. For me, Greenhaus is about thinking ahead for my future – if I do have a family and children one day – the thought of living in a healthier home, where the air is cleaner and greener, is also a real benefit.”