Government Scheme

Heard there was a piece in the news on Wednesday night about the government announcing some sort of rent to buy scheme. Does anyone know where I could get more info on this?

Thanks

check out www.Rent2Buy.ie

thanks for the reply hizzy, I have seen that site many a time but this was something the government was actually going to be involved in

Thinks its to do with them trying to offload the affordable houses that they have standing unoccupied - rent to buy was one of the suggestions on what to do with them...

Dublander, as I understand it is something Dublin City Council are considering implementing. They are looking at 3 years tenancy with the option of the tenant then purchasing as they have glut of properties they acquired for the Affordable Housing initiative which are not sold to date and are costing €300,000 pm in repayments. If they begin this initiative it would probably be adopted by other local autorities also, at least the ones with a large number of similar properties. On the flip side of this the CIF are making noises about the percentage which Builders have been required to give to LA's for Social Housing, so there may be a change there in the near future also. If you are in the market for it best of luck.

Rent-to-buy housing: Scheme or scam?


Builders are dreaming up more and more ways to sell houses and now some developers in Ireland are getting involved in 'Rent to Buy' schemes.
They work like hire purchase schemes allowing the tenant to move in and start renting in the house they hope to eventually buy.
So how does it work and is there a downside?

Morning Ireland reporter Eleanor Burnhill looked into what's on offer.
What are rent-to-buy schemes?
They essentially allow you to try before you buy.

They are similar to a lease option agreement in the commercial market, giving you the option to buy the house you are already living in on an agreed date which can be any time from six months up to three years.
Rent has traditionally been seen as dead money and these schemes allow you to put some of that money towards saving up a deposit for your future house.
The developer generally agrees to sell to you at a fixed price in the future and is locked in to the agreement.
You have the option to say yes or no.

So is there a catch?
You generally pay a deposit - say between €3000 and €5000 or perhaps 2% of the purchase price. This is not usually refundable.
You generally pay over and above market rents and not all of the money you pay goes towards your eventual deposit.

How does it work?

You build up credit in the home which in theory should allow you to prove to your bank that you are capable of saving. In the current credit crunch it is difficult to get a 100% mortgage, but if you can show you have paid X amount of value into your home then you might stand a better chance of being given more money.
The developer takes the credit you have saved up off the purchase price of the house.
How many of these schemes operating in Ireland and where?

There are only three or four here so far.

The scheme is currently on offer in county Cork through Ascon Gable and Glen Beg developments who both say it has been successful in stimulating demand there.

Roche construction has also been offering a similar scheme in Limerick, and has been available in the past in west of Ireland, but it did not work there as house prices fell on the open market. This meant that the sale price had to be renegotiated or the period of the lease option had to be extended.

The developer gets a good potential buyer who will hopefully take care of the property and he gets a steady income allowing him to refinance or invest in his or her property portfolio.

I went to county Cork where I met up with property developer Sean Power from Glen Beg developments who runs the website Rent2Buy.ie.
He is setting up future sales on a number of properties in the county Cork village of Boherbue which is between Mallow in County Cork and Killarney in County Kerry.
He also hopes to act as a future go-between for private sellers and other developers who are interested in this scheme.
But there are some people have been sounding a note of caution about these schemes, correct?

In Australia such schemes were very controversial. Some there and in New Zealand have worked successfully but in other cases, families ended up locked out of homes that they could never afford to buy.

Many had poor credit ratings in the first place and were not good potential house buyers. Sean Power says the way round this is to get his potential buyers to get credit checks and make sure they are in a position to close.
I also met with Aideen Hayden, chairperson of the housing advocacy group Threshhold, who urged people to check with their solicitors and to go in with their eyes open.

But, others say that these schemes are offering a choice to future buyers who might be struggling to save up the kind of deposit that would now be necessary for say a 92% mortgage.
What future do these schemes have?
It depends what happens to the market. You are taking a gamble on whether house prices go up or down. The developer in West of Ireland who tried these early on says they only work in markets where house prices are rising or holding steady.

In worst case scenario, you could still be rejected by the bank and have made a lot of changes to the home, or become so attached to it you are not in a strong negotiating position. You could also find out that you could have bought the house for cheaper on the open market.

Putting money into credit union or a high interest account could be an equally valid way of saving while you rent as you will have more choice and flexibility in terms of the house you buy.
Eleanor Burnhill is a reporter for Morning Ireland.

Found what I was looking for, thanks for the replies.

http://www.independent.ie/national-...ves-3000-affordable-homes-unsold-1609717.html

You are taking a gamble on whether house prices go up or down. The developer in West of Ireland who tried these early on says they only work in markets where house prices are rising or holding steady.

Click to expand...

There you go. Basically a buyer is making a bet on the price going up between initial occupation and by the time the buyer has option of buying.

We all know whats happening out there, walk away from this serious gamble.

gurramok said:

There you go. Basically a buyer is making a bet on the price going up between initial occupation and by the time the buyer has option of buying.

We all know whats happening out there, walk away from this serious gamble.

Click to expand...

I know what you are saying but it is tempting bc lets say I stay renting and my rent is around 1,000 that is 36,000 over 3 years, then in those 3 years the prop would have to come down by another 36,000 for me to be loosing out.

Just another way of looking at it.

btw I am not in this position but been asked to look into it by someone else

If price after 3 years goes down below agreed price with developer - what happens?
ie. the bank wont lend more than 80-90% price of valuation x of house...?

where would you, as purchaser, be contractually then?

As I see it the scheme can't possibly favour buyers when prices are dropping so quickly.
Annual average drop is (being generous) 10% at the moment.
Lets say a property is available for 380. You agree to buy it at this or even 360 and rent it for 3 years at 1400pm. In 3 years you've paid off 50k. Great. Problem is, it's now valued by the banks at 300k. If, and it's a big if, you can get a 90% mortgage that gives you 270k. Add on the 50k you've paid and you get 330k. A shedload of money short of what you need to pay if you want to keep it.
Ironically, the more the price drops over the three years, the more unaffordable it becomes.
The key point is your mortgage will be based on the market value of the property when you apply for the mortgage not when you sign up for the scheme now.

Maybe I'm missing some element of the plan. Would welcome any comments.
K