New scheme from Sussex housebuilder turns renters into buyers

The new scheme, called Rent then Buy, will allow qualifying first time buyers to put down just a 2.5% deposit, exchange contracts and move into their new home straight away. It is being launched initially as a pilot in the Barratt David Wilson Southern Regions across the South East at its Ecclesden Park development in Angmering, Meadowburne Place development in Lower Willingdon and Ryebank Gate in Yapton.

Using the scheme buyers can spend six months renting their chosen new home while their monthly payments build their deposit up to 5%. At the end of the six-month rental period, the money they have paid in rent is counted as being the remaining 2.5% of their deposit, and they can then draw down a 95% mortgage and complete the purchase of their new home.

Adrian MacDiarmid, head of mortgages at Barratt Developments, said. “First time buyers often tell us they can’t save for a deposit because they are already paying “their landlord’s mortgage”. This is why we are launching Rent then Buy to solve that problem for FTBs. The scheme offers an innovative way to speed up the saving process, allowing homebuyers to get started on their new life in one of our beautiful new homes across the South-East.”

The new scheme, which will be available at selected homes and developments, is open to first time buyers who are buying a home to live in themselves, have saved a 2.5% deposit and are financially qualified to take out a 95% mortgage. The home they are buying must be priced at no more than £425,000.

The process of buying using Rent then Buy is as follows:

1. Choose a selected new Barratt home and pay a £500 deposit
2. Apply for a 95% mortgage from an approved lender that will issue a mortgage offer valid for seven months
3. Exchange on the home with a 2.5% deposit and move in straight away
4. Live in the home and pay rent for six months, which at 5% yield will equate to the balance of a full 5% deposit
5. At the end of six months, complete on the purchase of the home with the rent paid making up the rest of the 5% deposit

“With saving for a deposit becoming increasingly difficult and with rents rising fast, Rent then Buy offers homebuyers a chance to seize the moment and lock in the home of their choice,” adds Adrian MacDiarmid. “Instead of paying private rent that eats up all their savings, they can put that money to good use as part of their deposit, all while they are enjoying living in their new home.”