Rent To Buy
Become a Tenant Buyer
What is a Tenant Buyer?
A Tenant Buyer is a future purchaser that has the option to purchase a property at an agreed price at an agreed future date, usually 2– 5 years, during this time they will have many of the benefits of a traditional homeowner without having to obtain a mortgage to get started. The Seller will allow the Tenant Buyer to live in the home as a tenant before they actually purchase the home from them.
How it Works
- You find a Rent to Buy property you like on our Properties to Rent section and arrange a viewing by calling 0845 0093 673.
- If you like the property and you decide you would like to enter into an Option to Purchase agreement. You agree with us what period you would like to take the option over (between 2 & 5 years) and confirm the modest option fee, monthly rental and any additional monthly Option Consideration Payments
- The legal documentation is drawn up by Solicitors along with an Assured Tenancy Agreement for the duration of the option.
- Upon moving in you are free to enhance and add value to property during the option period as if you already owned the property.
- At the end of the option period you purchase the property at the previously agreed price and any equity the property has gained is all yours.
- As a Tenant Buyer you are not obligated to purchase the home at the end of your option/rental period.
- The Seller is required to sell the Property to the Tenant Buyer should the Tenant Buyer choose to exercise the right to buy during the option period.
So in the same period a traditional tenant would have paid 2 – 5 years of dead rent money, you as a Tenant Buyer will own you own home... easy!
How Long Does It Take?
You can get into your “Own Home” very quickly, once the relevant paperwork has been signed then we can work around a date that suits you, normally we work to a timescale of around 4 weeks, this gives you the time to pack and sort out things like new schools etc.
How Much to Get Started?
You will need a deposit of about 2% of the final purchase price to cover legal and office expenses but this will be deducted from the purchase price when you exercise your option to buy.
How Much Monthly?
An agreed monthly rent is paid by the Tenant Buyer to the Seller during the option period, as well as these payments you can make additional Option Consideration Payments that will reduce the final purchase price or form part of your deposit when you choose to exercise your Rent to Buy Option in future years. Watermill Properties will match your additional payments pound for pound for an agreed period
What Happens at the End of the Option Period?
At the end of the option period you have a choice. You have the option to purchase the property. If you choose to exercise your option to purchase the property at the price you agreed at the beginning, your “Option Consideration Payments” and initial deposit, together with Watermill’s pound for pound match will form part or all of your deposit, you will also retain any additional equity the property has accumulated during the option period, should you choose to purchase.
Example of a Lease Option
Jane and Bob find a property they like on our Properties to Rent section and want to enter into an agreement to purchase the property in 5 years time.
This is what happens. Market valuation of the property in 2011 is £100,000.
They will pay £108,000 for the property in 2016. If the property is worth more in 5 years time, say £125,000 they will keep the extra growth/equity. They pay £2,000 upfront (Rent to Buy Deposit) which will come off the purchase price at the end of the 5 year term. The market rent for the property is £525, and they will pay this rent per month for the duration of the 5 year term with NO INCREASES. They can afford to pay an extra £75 additional per month on top of the monthly rent payment, again, these additional payments will come off the purchase price at the end of the 5 year term. We will match this additional payment pound for pound over the 5 years.
They live in the house for 5 years, treating it like their own home and when the day comes to complete the purchase, this is what happens. The purchase price is £107,000and Jane and Bob need a mortgage for 90% of the purchase price which is £96,300. They will need a deposit of 10% which is £10,700. They have the original £2,000 deposit they put in at the beginning. They have paid an additional monthly payment of £75 over the 5 years which equates to £4,500 towards the deposit. They have the Watermill pound for pound match money, which equates to £4,500. In total £11,000 towards a deposit of £10,700 meaning we give you back £300 in your hand, plus if the property is worth more than the £107,000 purchase price, you keep that too…So for £2,000 upfront and less than current market rent per month Jane and Bob own their own home.
Still want to pay dead rent money?
Benefits of a Tenant Buyer
No mortgage required to get started
You are in a position of Ownership on Day 1
Very low entry money to “Get Started” and become a Homeowner
You own 100% of the property
If the property value increases, you keep the difference
Buy over a time period that suits you
You can walk away at any time if your circumstances change