Industry backs Rent to Buy

The government pledged to put £400m towards the scheme, which will enable tenants to rent cheaply for seven years before having first refusal to purchase the property.

Ray Boulger, senior technical manager of John Charcol, said: “It’s good that the government are putting some money into ideas that are designed to boost housebuilding.

“The devil will be in the detail. If you are getting a subsidy rent and it is being used as a deposit someone has to pay for that – and that is presumably the taxpayer.

“The government owns surplus property so it is feasible for the scheme to work.”

Under the scheme 10,000 homes – mainly one and two bedroom apartments – will be built across the country from 2015 to 2018.

London-based broker Jonathan Burridge of added: “I’m a great believer in social housing schemes.

“When I had involvement with the housing association we were very keen on rent to buy schemes as a way to build stock and get people to purchase.

“I welcome it. It’s going to bolster to the industry – primarily the lower priced area of the market which is good news.

“We need more affordable housing so people can have the opportunity to get on the ladder and this is a good solution.”

Peter Gettings, product manager from London and Country, gave Rent to Buy a mixed reception.

He said: “It’s more of a long-term plan to homeownership – as indeed is the building scheme itself, which will fund up to 10,000 new builds from 2015 to 2018.

“So the later participants will be looking at owning their home a little over a decade from now.

“With the shortfall in house building generally said to be in the order of hundreds of thousands per year, 10,000 homes over three years clearly isn’t going to make a huge difference to housing supply by itself and arguably may not do all that much for ownership either if prices keep heading the way they are.”

Gettings added: “The concept of Rent to Buy is an intriguing one.

“In a way it seeks to condense the previous iteration (post-war social housing build through to ownership under Margaret Thatcher’s right to buy) into years rather than decades.

“And rather than offering a discount on the price, the state is effectively subsidising the deposit.

“In that sense the main weakness of this scheme could simply be its limited scale: the historic massive programme that built low-cost social housing to convert (over time) into private ownership is arguably the process that’s finally unwound, and could do with restarting again."