“It’s hard renting when you have children, says business consultant David Sanders, 46. Sanders lives with his wife, Becky, a specialist SEN teacher, and their two children, aged 11 and 7, in Forest Hill.
“In both Brighton, where we lived previously, and London, we’d had to move out of properties because landlords wanted them back,” he continues.
The Any Home Plan sees HomeNow purchase a property on behalf of a tenant, known as a resident, which they will live in, paying rent for five years.
At the end of this period, the property is valued, with residents given a proportion of the increase in equity to use as a deposit, and the opportunity to buy their property using a standard mortgage. Once sold, they own the property in the usual way.
Most properties are eligible for the Any Home Plan and there is the option of buying pre-selected new builds on a slightly different scheme.
For the former, the resident chooses a property and, if it’s deemed suitable, HomeNow will agree to fund the purchase.
In tandem with HomeNow, and using a budget everyone was happy with, Sanders chose a three-bedroom, end-of-terrace, 1960s probate home in Forest Hill, where he was already renting.
While it was Sanders who negotiated the price with the agent, HomeNow were the purchasers and paid £425,000 in April 2024.
Under the scheme, the rent equates to 7.5 per cent a year of the total cost, which, for Sanders, works out at £2,650 a month and this is fixed for five years. He paid a small rental deposit and a holding fee which was taken off the first month’s rent.
David and Becky have chosen to buy a three-bedroom 1960s home in Forest Hill, where they were already renting
Supplied
“HomeNow basically gets a mortgage out on your behalf,” says Sanders, who had to undergo affordability checks before signing up to the scheme.
“There are a few more checks than a landlord would usually do, as they want to see that you will also be able to save. The process is a miniature version of applying for a mortgage.”
While they check in annually, HomeNow don’t act as traditional landlords which could be seen as a pro or con, depending on your viewpoint.
“They are very hands-off so there’s the illusion that the home is already yours, and part of the service is not having to talk to a landlord,” says Sanders.
“If something goes wrong, you can call them but it’s often better to do it yourself, as the cost of repairs is removed from the percentage you get back at the end, and it’s often cheaper to organise a plumber your own way.
“Our boiler broke and we got a new one, which will increase the value of the property anyway.”
There is also a slight premium on the amount of rent you pay but Sanders believes it works out at the end. “You do need to make sure you are saving (for a deposit) at the same time,” he advises.
Once residents have moved in, the property is very much seen as theirs and can be decorated or changed however they like (within reason).
“We have done some work as it was a bit of a hole; someone had put a stud wall where the old sliding doors were, so we removed that. We also repaired the garden and got some new decking,” says Sanders. “I am very keen on the aesthetic, and I can add value by doing what I want here.”
For major work, HomeNow send someone to check it meets safety standards. That said, Sanders flags that if you wanted to do something major, such as adding a roof terrace, it’s best done after the rental period is up as you only get a proportion of the increased value in the first five years.
Once the rental period has been completed, Sanders will receive a third of the increase in value to put towards his deposit but, moving forward, this ‘refund’ is calculated slightly differently, with residents receiving the equivalent of five per cent of the home’s value.
For a property worth £425,000, a 21 per cent increase over five years would give a value of £514,250 which would mean residents pocket a five per cent rental refund of £25,713.
The expectation is that this is put towards a deposit but there is no obligation to do this, and the money can be used for other things should the residents wish to move on.
What if the value doesn’t increase or your plans change?
An obvious question, particularly in the current market, is what happens should the property not go up in value?
In this case, the amount you are refunded may be less than five per cent or the rental period may be extended. “The whole contract is based on your house going up in value,” says Sanders.
“There are a number of options; they are also not obliged to sell it to you if it’s not increased and you are not obliged to buy it.”
If your circumstances change during the five-year rental period, for example you lose your job or need to move house, an early exit may be possible, although this is reviewed on a case-by-case basis.
“I would absolutely recommend this to others,” says Sanders. “Even if you get to the end of the five years and there’s been no increase in value, you’ve had that security… You would be solely disappointed if it’s not yours at the end.”
Other low-deposit schemes for first-time buyers
Fairview’s Save to Buy scheme
Renters need a one per cent deposit and the first six to 24 months’ rent contribute to the rest of their downpayment. Read more here.
The Government’s Rent to Buy plan
Tenants can rent at a 20 per cent discount so they can save up for a deposit. Read more here.
First-time buyers can purchase a new-build property from participating developers using a five per cent deposit. Read more here.
This is a mortgage boost for first-time buyers with five per cent deposits. Read more here.