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It’s not just social housing tenants who can access right to buy – you can too, by taking out a lease option on a property of your choice.

Based on a US model, a lease option, option to buy or rent to buy scheme could provide the perfect hybrid between renting and buying your first home.

The companies offering this service allow you to either choose your own property or choose one from a portfolio of theirs. You can rent the property from them – typically a new-build flat – and have the opportunity of purchasing yourself within a three-year period. There may be an up front cost of taking out the option to buy at a later date.

The upside is, rather than playing a game of ‘savings catch-up’ whereby you can’t save as fast as house prices rise, the price of the property will be fixed from the day you move in as a tenant. And, as the property will be yours one day, any time effort and money you put into its décor will not be wasted.

Of course this opportunity will cost you somewhere along the line. When you sign the tenancy agreement there may be an ‘option fee’ of around two per cent of the current property value. However, this may be lower than the market value as they buy properties in bulk.

This option fee secures your ‘irrevocable right to buy’ within a set period, say three years but it doesn’t tie you into doing so. If you don’t, it is possible to re-enter into the three-year agreement. Details may change depending on which company you are researching. Some companies offer a similar scheme but without the need to even pay for an option to buy – you simply buy the property after a set period if you want to at a pre-agreed price.

The rent you pay while waiting to buy may also be priced at a premium of around 10 per cent. However, if you have not managed to save for a deposit by this time, you should have one by default. This is because the mortgage you need to buy the property should be considerably less than its value – providing of course that property prices have continued to rise.

Companies operating in this field will need to know how much you will be able to afford when you come to buy the property/exercise your option so it’s worth contacting an IFA or mortgage advisor before you discuss your property needs with them.

Helen Adams
www.FirstRungNow.com