A new rent-to-own scheme means some tenants can save a slice of their rent to help build a deposit to buy.
Financial platform Kettel Homes allows tenants to choose the home they want to buy, then rents it back to them at market rates while they save their deposit, build their credit score and enhance their affordability.
Institutional property investors purchase the properties - typically single-family homes bought for between £125,000 and £400,000 outside of London - and then uses its platform to manage the process.
By fixing their rent, savings and future purchase price from the beginning, Kettel sets out what it calls “a roadmap for first-time buyers to achieve their goal of homeownership within 36 months, ensuring the price of the property does not increase over time.“
Those using the service are asked to save a 10 per cent deposit and will be given a standard repayment mortgage as they transition from renting to owning. If the customer decides not to purchase, they still get to keep their savings minus a re-listing fee. The customer then has the option stay on renting the property.
The concept has been launched in Birmingham, Coventry, Leicester and surrounding areas, with the first home purchases underway, and is expanding to other cities across the Midlands and North over the next two years.
One of the firms behind the idea is the Nationwide Building Society, whose chief strategy and sustainability officer - Claire Tracey - says: “The fact is many individuals who are struggling financially have to pay more for the same goods and services. More needs to be done to make things fairer for those who have the least means. But these are not easy issues to solve and require a truly collaborative, cross-sector effort.
“Through providing meaningful support alongside funding, we are looking to help transform the lives of those living in poverty through scaling long-term solutions to help tackle the challenges this presents.”
And Trevor Stunden, chief executive and co-founder of Kettel Homes, adds: “We are setting out to change that by using a blended model to help give aspirational first-time buyers the structure they need to get their foot on the ladder. Our goal is to expand homeownership to people who couldn’t otherwise get access to traditional home financing at the moment. The long-term benefits of homeownership for both the individual and society are clear and makes for stronger families and communities.”
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