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£400 million Rent to Buy scheme launched

Words: Laura Edgar
Rent / iStock

Communities secretary Eric Pickles has launched a £400 million Rent to Buy programme to increase the building of rental homes across the UK.

The programme, launched on 26 September, will include help for "hard-working" people to enable them to save as they rent so they can upgrade into home ownership later.

Under this scheme, housing associations and other providers are able to bid for a share of £400 million in low-cost loans to build up to 10,000 new homes across the country. To be built from 2015 through to 2018, the homes available for rent will consist of one and two bedroom apartments.

Landlords must make the properties available for rent at a price below market rates for a minimum of seven years, after which the tenant will have first refusal to buy the property. The fixed period should allow tenants to save money for a deposit for their own home.

If the home is sold, the housing association will have the option to use any returns on their investment to build more affordable homes in the area or the property can be rented again at an affordable price.

Alongside Help to Buy and Right to Buy, this rental programme is part of a broader £23 billion affordable homes programme for 2015 to 2018.

Pickles said: “This government is standing by people who work hard and do the right thing, and helping them move on and up in life.

"Both house building and the number of first time buyers are now at their highest rate since 2007. But there is more to do. As part of our wider housing programme, this new scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to home ownership down the line."

London mayor Boris Johnson added: “Through this exciting new fund we hope to provide thousands of brand new homes many years sooner than would otherwise be possible, and make them available to rent at below market rates for hardworking Londoners.”