Featured Properties

Rent to Own - Scheme in Detail

This page gives you an overview to provide a brief understanding of this unique scheme:

• Owner(s) of a property agrees to “Sell” their property on a Rent to Own scheme.
• The Property is valued at FULL OPEN MARKET VALUATION.
• The Property is marketed on Rent to Own scheme at the FULL OPEN MARKET VALUATION.
• Usually, no offers are acceptable on this scheme. As a result, full open market value is usually achieved.
• Buyer agrees to rent the property until eventual purchase on the scheme at full open market value.
• Qualified legal contracts are then exchanged between seller and tenant/buyer, agreeing to an option to sell and buy at the end of a specific period. The period chosen is normally 2 or 3 years.
• The buyer then pays a deposit of a minimum of 2% (minimum £2,000) of the valuation, depending on the value of the house.
• The buyer then pays a true, commercially agreed rent per month to live in the property for the specified period.
• Rental occupancy is controlled by Assured Shorthold Tenancy agreements giving protection to both parties.
• The buyer also pays an agreed “overpayment” per month. This is normally between £100 - £250 and is paid to the seller.
• At the completion of the agreed term, the buyer then purchases the property at the original agreed full market valuation, agreed at inception.
• However, the deposit paid at inception along with all the “overpayments” during the term are accrued on an accountancy basis only and are “credited” towards the deposit for the purchase.
• The seller agrees to match the “overpayment” portion only, again as a paper credit towards the deposit.
• The house then completes its sale.

Monetary Terms (Example)

• Full Open Market Valuation - £150,000
• £3,000 deposit (2%) paid by tenant/buyer to seller
• (example) £600pcm rent payable under normal tenancy agreement to the seller
• PLUS (example) £200pcm overpayment paid by tenant/buyer to the seller.
• (example) 36 month contract

Therefore, the seller has received during the tenancy period of the agreement:

1. £3,000 deposit
2. Plus £7,200 total overpayments

To complete the sale, PROVIDING that the tenant/buyer has adhered to the conditions of the contract, the seller agrees to match the overpayments received (c), i.e.

1. £7,200 matched overpayments by the seller

Therefore, an accrued “benefit” towards the final purchase price:
£17,400 (a + b + c) credited towards original full open market valuation.

Therefore, the total finance required by the buyer to complete:
£132,600

Costs

1½% (min £1,500) arrangement fee payable by seller at inception (usually met from deposit generated from tenant/buyer).

Fully managed during contracted period for property (if required) 10% (significantly less than traditional management fees) of rental achieved.

These costs include all legal contracts for all aspects of the Rent to Own scheme and AST (Assured Shorthold Tenancy) agreements.

Benefits

• Full open market value achieved for contracted selling price – NO offers.
• Deposit received.
• Overpayments received.
• Full financial management (if required).
• All legally contracted.

Should a buyer not proceed for any reason, the property remains with the seller BUT all deposits and overpayments are forfeited by the tenant/buyer and retained by the seller. Alternative options are available to both parties in the unlikely event this occurs.

This documented process is designed for information only. Town & Country will guide both seller and buyer through the process step-by-step.