Frequently Asked Questions
The Rentplus Model
Q. What are the benefits of Rentplus for tenants?
A. The Rentplus model is designed for aspirant homeowners who are unable to purchase a home for a variety of reasons, including lack of savings for a deposit. With Rentplus, tenants are offered:
A five year renewable tenancy providing stability for their families
A new home at an Affordable rent (80% of market rent or LHA, whichever is lower), with lower running costs
A planned purchase timescale to suit their financial circumstances, at 5, 10, 15 or 20 years with support and guidance to do so
Housing management services from a reputable local Registered Provider (RP)
No repairing obligations during the rental period – unlike shared ownership, the RP is responsible for all repairs and maintenance until the tenant purchases the property
Opportunity to demonstrate creditworthiness through a five-year tenancy of rent payments to help mortgage application and to save with Help to Buy Cash ISA
Access to an unlimited range of mortgage products and competitive interest rates
A gifted deposit of 10% of the open market value of the property at the time of 100% purchase
Home which is planned and integrated as part of open market housing and designed with the future in mind
Q. Who are Rentplus homes for?
A: Rentplus homes are suitable for anyone who is local to the area, is working or in training, has an aspiration to own their own home at some point in the future, has an income of less than £80,000 p.a. (in line with ‘Help to Buy Shared Ownership’) and are currently unable to save for a deposit. To be considered households will need to be registered on their local authority choice based lettings housing register, shared ownership register or Help to Buy register.
Q. How are the homes allocated?
A. The local authority in which the homes are situated will decide who is eligible for Rentplus homes in their area. In many cases local authorities are looking to target those households who are in the middle to lower bandings on their choice based letting schemes and/or households on their ‘Help to Buy’ register. Local authorities may also consider other criteria such as ‘is the tenant freeing up an existing affordable rented home’ which could be used to house priority needs households.
Q. Will tenants have to pay anything before they can move in?
A. Yes - they will need to pay a month's rent in advance, although no deposit is required.
Q. Are tenants allowed to under occupy?
A. Yes – the key issue is whether the prospective tenant can afford the rent. Before properties are allocated the managing Registered Provider (RP) will undertake an affordability assessment with the prospective tenant, which will determine the size of their future home. Tenants just need to be aware they will incur the higher rent charges if they are renting a larger home.
Q. What about the tenancy agreement?
A. The managing RP will use their usual Assured Shorthold Tenancy Agreement for all Rentplus tenants, so they will be no different to any other housing association tenant, and will have all the same rights and responsibilities. The tenancy agreement will be on a five year renewable basis, so tenants have security and stability, and are able to establish themselves in their local community.
Q. Who repairs the properties?
A. Unlike shared ownership, where the part-owner is responsible for the repairs to their home, a Rentplus tenant is not responsible for repairs to their home until they buy it. While they rent their home, the managing housing association is responsible for all repair and maintenance work.
Q. Who owns the properties?
A. The properties are owned by Rentplus. They are leased and managed by a RP. This enables the RP to charge an ‘affordable rent’ which is 80% of the local market rents or the Local Housing Allowance (Housing Benefit) level whichever is the lower. The tenant will have all the rights and responsibilities of a RP tenant.
Q. When can the tenant buy their home?
A. Rentplus tenants can buy their home at either 5, 10, 15 or 20 years.
Rentplus knows that not everyone will be able to purchase at year 5, and so the different timescales to buy allow flexibility and choice to suit the different circumstances of prospective home owners when they move in. Prospective purchasers will work with the managing RP to identify when is likely to be the best timescale for them to purchase depending on their financial circumstances now and what they are likely to be in the future – this could be 5 years, 10 years 15 years or 20 years.
Q. How does the purchase process work?
A. At the time the tenant is planning to purchase their home, the property will be valued. Rentplus will give the tenant 10% of the open market value of their home at the time of purchase as a deposit.
The deposit is a gift of actual money rather than a discount off the price of the property, managed by the purchasers’ solicitor, which means mortgage lenders do not require tenants to have additional savings towards their deposit. Tenants can therefore apply for 90% mortgages (or less if they have additional savings).
Q. Can the tenant continue renting if they are unable to purchase?
A. The Rentplus funding model works on the basis that 25% of the properties will be sold every five years. The managing RP will be working with tenants to ensure they are ready to buy their home in their designated time frame. However if the tenant cannot purchase at the agreed time there is a cascade process for the RP to follow before the property is sold on the open market:
Other tenants in the same scheme (i.e. those who originally looked to purchase at 10 years etc) are offered the opportunity to bring forward their purchase
If no other tenant is able or interested in bringing forward their purchase, the managing RP will be offered the opportunity to buy the home; Rentplus will give the RP the 10% discount. The RP is able to convert the property into either a rented or shared ownership home for the tenant
If the managing RP is unable to purchase the property, it would be offered to other RPs in the area (with the 10% discount), with the same option to continue renting or offer shared ownership to the existing tenant
If no other RP wishes to purchase the property, it will be sold on the open market; the RP will work with the tenant to find them alternative housing, either within their own portfolio or in the private rented accommodation
Q. What if the tenant suffers financial difficulties whilst renting?
A. The managing RP will be supporting the tenant into home ownership and therefore should be made aware of any financial difficulties as soon as possible. Officers will offer support and guidance to enable tenants to get back on track wherever possible, including changing the planned date of purchase where possible.
Q. What are the tenants’ rights and responsibilities whilst they are renting?
A. Rentplus homes are let on a 5 year renewable tenancy through the managing RP. Tenants will have all the same rights and responsibilities as the RP’s other tenants.
Q. Can the tenant buy shares in their home (staircase into home ownership)?
A. The Rentplus model enables the tenant to buy 100% of their home at the date they agreed when signing their tenancy agreement – either 5, 10, 15 or 20 years.
However, if the tenant is unable to buy their home at the agreed stage and the RP decides to purchase the property, the RP can choose to either continue renting to the tenant or convert the property into shared ownership.
Q. How long would a purchaser have to wait before being able to sell the property on?
A. The purchaser would be able to sell the property on at any time; however, if this is during the first 2 years they would be required to pay back all or a proportion of the 10% gifted deposit.
Q. Do tenants have the Right to Buy a Rentplus home?
A. No, the Right to Buy does not apply to Rentplus homes as the Registered Provider doesn’t own the properties, and has instead the 20 year lease for the rental period.
Q. Does Pay to Stay apply to Rentplus homes?
A. No, Rentplus tenants will not be caught by the Pay to Stay restrictions, and will continue to benefit from an affordable rent for their rental period irrespective of their income.