I've heard a lot about Rent to Buy schemes however I have yet to hear of or come across anyone who has actually successfully arranged this!
Do any of you know of anyone who has been able to do this and if so where in the country?
Thanks a lot
A word of caution - in theory its a great idea but I can see one huge risk.
A friend of mine decided to do this a couple of years ago. I had worked in conveyancing in the uk and explained the following could happen - you agree to the rent to buy with a purchase price of x at the start. A year later you have paid your rent/deposit but find that property prices have dropped and you cannot get a mortgage on that property for the amount agreed last year because of the drop in property prices. As far as the lender is concerned that property is not worth x.
Anyway she went ahead with it and a year later this is what happened - the bank wouldn't loan the money she needed and the landlord/seller wasn't prepared to sell at the reduced price.
I understand that. I think this is why I haven't heard of anyone being successful.
I wouldn't enter into the contract without there being a clause that should the price drop so will the asking price.
I have checked out rentobuyireland.ie and they say this:
[i:1qi2d9l2]We guarantee that if the property value falls by 8% or more by the end of your rent to buy contract, that the seller will renegotiate the price. This means that you will pay the reduced sales price on the day. If however, the property price goes up during the term of your rent to buy contract you will not have to renegotiate.
We have found that the biggest obstacle to anybody buying is a fear that if the property falls in value you will lose out. Rent2BuyIreland.ie solution to that, is that each home plan contract that you enter into through Rent2BuyIreland.ie has a condition in it that if at the end of the 36 month contract your property has dropped in value by 8% or more that the seller agrees to negotiate a new price based on a lower valuation.[/i:1qi2d9l2]
I would just be interested to see if anybody in Ireland has actually bought their property or is in the process of buying this way.
Thanks for your reply.
A friend of mine done this 3 years ago and like the above poster said she was unable to get a mortgage for x amount ([i:z9r58nng]both her and the builder agreed on this amount legally )[/i:z9r58nng]at the end of the 3 years . However she was able to come to a compromise with the builder and is continuing to rent her house from the builder and next year she will try again to get a mortgage for a lesser amount but this will still be more than the value of the house at that time IYKWIM.
I think the rent to buy scheme is a very good deal if you can get it to work for yourself. A lot of builders have dozens of houses they cant sell or rent so if i was to get down this path i would be making it clear that i would rent for 1,2 or 3 years and then i would get a mortgage for the price of the house at that time.You are taking a risk but not quite as big a risk as the builder.
I also do know a builder who went through with it on these terms with his thoughts being that he is better getting rent every week for a house that would be other wise empty and at the end of the 1,2,or 3 years he will be able to sell the house .
If i was to do this i would make sure to get a great solicitor who knows a lot about rent to buy and i would make sure every point is crystal clear . Dot your i 's and cross your t 's
two couples i know have done it in the last 2 months, i dont totally understand the way it works, my friend said the main reason she went for it was because she couldnt get a mortgage and all she needed was 3 grand up front for the house she wanted with rent to buy
i didnt realise you pay rent for 3 years then try get a mortgage to the value of the house??? id say she'll struggle again
The main thought behind rent to buy is to help people who cannot get a mortgage to pay rent for 1, 2, or 3 years and to use the rent as the deposit for the house and to show the bank that they are successfully paying the rent which in some cases is higher than the mortgage repayments. Its kinda building up a good credit system with the bank.
We looked into the scheme last year when we were looking for a house.
In the end we decided it wasn't for us.
The estate we were looking at only had 8 houses built in it and we drove by it a couple of weeks ago and it still only has 8 houses. When we spoke to the builder a year ago about the scheme he showed us the plans of the estate and said he had sold 14 houses on the rent to buy scheme yet they still aren't built.
I personally think it is too much of a risk and buyers aren't guaranteed to get a mortgage.
If you're doing it make sure there is a detailed clause on the procedure if you don't want to go ahead with buying at the end of the three, etc years.
We bought our house on this scheme. It worked out so well for us as we didn't have a 10% deposit to buy the house straight away. We agreed with the management company that if the house price dropped in the year we were 'renting', that the price we would pay would also drop. I think the valuation dropped by about 30k in that year!!!
I'd definitely recommend it as we got a dream house that we wouldn't have been able to afford up front.