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Affordable Rent to Buy

Rentplus is an innovative rent-to-buy model designed to help individuals and families on lower to middle incomes transition from renting to owning their own home. Tenants rent newly built properties at an affordable rate - typically 80% of the market rent or the Local Housing Allowance rate - while saving for a deposit. After a set period (5, 10, 15, or 20 years), tenants are given the option to purchase the property with a gifted deposit of 10% of the home’s value, making homeownership more accessible.

The Rentplus model offers significant benefits for tenants, providing them with the time and financial flexibility to build a credit history and save for a deposit, without the pressure of high rental costs. Importantly, tenants are not obligated to purchase the property, giving them the freedom to choose whether homeownership is right for them at the end of their tenancy. If they decide to buy, they receive a 10% deposit gift to support their purchase.

Rentplus operates in over 160 local authority areas and is actively working with 120 other councils to deliver more homes. Over 750 units have been completed, with another 1,300 homes under construction or in contract, and thousands more in the pipeline. This model has proven successful, with over 85% of tenants who have reached the 5-year purchase opportunity successfully buying their homes, demonstrating the effectiveness of this pathway to homeownership.

By providing affordable rental rates, a long-term saving plan, and a gifted deposit, Rentplus helps overcome major barriers to homeownership for many individuals and families. The scheme plays a vital role in addressing the housing crisis, particularly for those who struggle to save for a deposit or secure a mortgage in the traditional housing market, all while supporting local communities and fostering sustainable homeownership.

Benefits of the Rentplus Model

  • Accessible Pathway to Homeownership: Rentplus offers an affordable and achievable route to homeownership for individuals and families who are typically excluded from the property market. Tenants can rent at an affordable rate, save for a deposit, and eventually purchase the property, helping those who struggle with traditional home-buying obstacles like high deposit requirements.
  • Affordable Rent: Tenants pay an affordable rent, which is either 80% of the market rent or the Local Housing Allowance (whichever is lower), including service charges. This makes Rentplus homes significantly more affordable than typical private rental options, helping individuals and families save more toward their future home purchase.
  • Gifted Deposit: The Rentplus model provides a 10% gifted deposit for those who decide to purchase the property after an agreed tenancy period (5, 10, 15, or 20 years). This deposit support addresses one of the most significant barriers to homeownership, which is saving for a traditional deposit.
  • No Repair or Maintenance Costs: As Rentplus homes are managed by housing associations, tenants do not have to worry about maintenance or repair costs. This makes it easier for them to save money and reduces the financial burden, enabling them to focus on saving for the future purchase.
  • Flexible Tenancy Periods: Rentplus offers flexible tenancy periods (5, 10, 15, or 20 years), allowing tenants ample time to save for a deposit while living in a stable, affordable home. This flexibility accommodates different financial situations and timelines for those who need more time to prepare for homeownership.
  • National Availability: Rentplus operates in over 100 local authority areas across the UK, with thousands of units either completed, under construction, or in the pipeline. This national coverage means that Rentplus can help people in a wide variety of locations, including rural areas, where affordable housing is often in short supply.
  • Helps Meet Housing Demand: Rentplus contributes to addressing the UK’s housing shortage by delivering affordable homes for people in need. With more than 1.2 million households on waiting lists, Rentplus helps to reduce housing inequality by providing affordable homes with a path to ownership.
  • No Government Funding Needed: Rentplus is funded entirely through institutional investment, meaning it doesn’t rely on government grants. This makes it a sustainable solution to the housing crisis without placing further pressure on public finances. It also helps free up existing affordable housing for other families in need.
  • Support for Rural Communities: Rentplus helps local authorities and neighbourhood planning groups in rural areas deliver homes that may otherwise not be built. By leveraging private institutional funding, Rentplus can provide housing solutions in locations where affordable housing construction is typically more difficult.

Challenges

  • Long Wait Before Purchase: Tenants are required to commit to renting for a significant period (5, 10, 15, or 20 years) before they can purchase the property. While this offers time to save for a deposit, some tenants may feel that the wait is too long, particularly those in more transient situations or with changing circumstances.
  • Limited Ownership Flexibility: While Rentplus tenants can buy the property after their agreed tenancy period, the model still locks them into a specific property. This might not be ideal for individuals who might need to relocate due to work, family, or other reasons during the rental period.
  • Affordability Dependent on Local Housing Allowance: Rentplus rents are set at a percentage of the local housing allowance, which varies across regions. In high-demand areas where the local housing allowance is low, tenants may still find it difficult to afford rent, even though it’s cheaper than market rents.
  • Market Risk After Tenancy Period: After the agreed rental period, the market rent may rise significantly, which could make it difficult for tenants to continue renting at affordable rates. This could be a concern for tenants who are unable to purchase the property and may find themselves priced out of the market.
  • Purchase Obligation May Not Suit All Tenants: While Rentplus offers a path to ownership, there is no obligation for tenants to purchase the property. However, some tenants may prefer long-term renting and may not be financially or personally ready for homeownership after their tenancy. This could lead to uncertainty regarding future housing options.
  • Limited Availability of Properties: While Rentplus is expanding, the number of available properties may still be limited in certain regions or areas with high demand. This could restrict access to the model, particularly for families in cities or rural areas where housing is scarce.
  • May Not Solve Immediate Housing Shortage: While Rentplus helps address long-term housing needs, the model may not be a quick solution to the immediate housing shortage, especially for those in urgent need of housing now. Waiting periods for Rentplus properties could still be a barrier for many households on waiting lists.
  • No Option for Customisation: Unlike the Rentfirst rent to buy model, Rentplus does not allow tenants to customise their homes. This could be a disadvantage for those who want to personalise their living space before eventually purchasing it.

Summary

The Rentplus affordable rent-to-buy model offers a promising solution for individuals and families excluded from the traditional housing market. It provides a stable, affordable route to homeownership through lower rents, a 10% gifted deposit, and flexible tenancy periods. Rentplus also helps meet the UK’s pressing housing needs by leveraging institutional funding, with a strong presence in both urban and rural areas. However, the model’s long tenancy periods, market risk after the rental phase, and limited availability of properties may pose challenges for some individuals. While it presents a creative way to facilitate homeownership for lower-income households, it may not meet the immediate housing needs of all prospective tenants.