Rent to Own (Wales)

Are you dreaming of owning a home in Wales but need help saving for a mortgage deposit? You're not alone. The Rent to Own Wales scheme offers an opportunity to get onto the property ladder without a significant deposit.

Here, we'll explore the ins and outs of this program, itd eligibility criteria and benefits. We'll also discuss alternative options in Wales for those who may not qualify for the scheme, helping you find the perfect pathway to homeownership.

The Rent to Own-Wales scheme no longer accepts new participating landlords and will not fund any new projects. However, properties are still being constructed that may be available to new applicants interested in applying for the scheme.

What is Rent to Own Wales?

The Rent to Own Wales scheme, backed by the Welsh Government, offers a helping hand to those who dream of owning a home but lack the funds for a mortgage deposit. You initially rent a new-build property within the scheme, gradually building up your deposit while paying rent and living in the property. Once the agreed-upon savings target is reached, tenants have the opportunity to buy the property on a Shared Ownership basis or outright.

After a period of time (usually five years or when the tenant decides to move out, whichever comes sooner), the tenant has the option to buy the property. If they decide to do so, 25% of the rent that has been paid, along with half of any increase in the market rate of the property's value, will be used as a lump sum towards the deposit.

Although Rent to Own is now closed to new participating landlords, some rental properties are still being constructed and may be available to eligible applicants.

Eligibility criteria

Eligibility for the Rent to Own Wales scheme requires meeting certain criteria, including:

• Applicants must be over 18 years of age.

• The combined gross household income should be between £16,000 and £60,000.

• Each property under the scheme will have a minimum income requirement.

• The scheme is open to people who do not currently own a property and cannot afford to purchase one without assistance.

Criteria for participating landlords and properties

Participating landlords were originally required to offer new-build or near-future properties, mainly unfurnished, under the Rent to Own Wales scheme. As the scheme no longer accepts new landlords, finding available properties may require some effort.

Searching the Welsh government website (gov.wales) is recommended to locate properties available under the scheme. The selection may be limited, as the initiative is only available on specific properties owned by participating landlords.

Application process

To apply for the Rent to Own Wales scheme, applicants must contact participating landlords by either calling or emailing them and then pay a holding fee of £250. The required reading material to apply for the scheme is the Rent to Own - Wales Buyers Guide.

Once the holding fee is paid, applicants must complete the application form, providing all the necessary information and documentation to demonstrate their eligibility for financial assistance from the scheme, including proof of sufficient funds.

Remember, the scheme is a serious commitment and it's important to fully understand the terms and conditions before you apply.

Securing your mortgage

In addition to applying for the scheme, you will also need to secure a mortgage at the end of the rental period, and this is something that we can help you with.

We have brokers who specialise in helping borrowers who are using government schemes get onto the property ladder as quickly and smoothly as possible.

You can book in a free, no-obligation chat with one of them below to discuss what your mortgage options will be if you are applying via Rent to Own, or choose the option to compare the latest rates on our free, whole-of-market comparison service:

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Financial benefits and assistance

The Rent to Own Wales scheme provides a variety of financial benefits and assistance to tenants. Renting a property under the scheme allows tenants to build up a lump sum for a deposit to buy the property from their rental payments. Additionally, tenants benefit from any increase in property value during their tenancy, allowing them to maximise their investment.

Building a lump sum

As tenants pay their rent, they are simultaneously building up a lump sum towards a deposit, enabling them to buy the property. This deposit is made up of 25% of the rent paid and any increase in the property's value during the tenancy period. This provides tenants with a significant financial boost towards homeownership.

Property value increase

Any increase in property value during the tenancy offers additional benefits to the Rent to Own Wales tenants. Half of the increase in value is added to their deposit, making it easier for them to secure a mortgage and purchase the property. This increase in value can also provide tenants with a financial boost if they decide to sell the property in the future.

Other advantages

Aside from the financial benefits, the main advantages of Rent to Buy are:

• It gives the ability to save for a deposit while renting a new-build home

• This helps individuals overcome the financial barriers to homeownership

• It makes homeownership more accessible to those who may not have the means to save for a deposit through traditional renting

Additionally, living in a new-build home comes with benefits such as reduced energy bills, contemporary fixtures and fittings, and a warranty from the builder.

Disadvantages

On the flip side, the Rent to Own Wales scheme has drawbacks. Limited property choices can make it challenging for tenants to find their ideal home, as the scheme is only available on specific properties owned by participating landlords.

Moreover, the scheme requires tenants to demonstrate their ability to take out a mortgage, which may be difficult for some, particularly those with poor credit or unstable employment.

Why choose Teito for your Rent to Own mortgage?

As an independent mortgage broker, we will act as intermediaries between you and potential lenders when it’s time to apply for your mortgage. We can help you in the following ways:

1) Access to a wide range of deals: Independent mortgage brokers have access to a vast array of mortgages from different lenders, including those that aren't available to the public. This can help you find a mortgage that suits your specific needs and circumstances.

2) Expertise and advice: Mortgage brokers are knowledgeable about the housing market and the mortgage process. They can provide valuable advice on the type of mortgage that might be suitable for you and guide you through the application process.

3) Time and effort saving: Searching for a mortgage can be a time-consuming and complex process. A mortgage broker can do the legwork for you, comparing interest rates from different lenders and negotiating the best terms on your behalf.

4) Help with paperwork: The mortgage process involves a lot of paperwork. A mortgage broker can help you understand and complete all the necessary documents.

Get started on your homeownership journey

Are you considering the Rent to Own scheme in Wales and need expert mortgage advice? At Teito, we are dedicated to helping individuals and families achieve their dream of homeownership. With access to a wide range of mortgages from different lenders, our team of experts can provide tailored advice and support throughout the application process.

Get in touch with us today to learn more about how we can help you.