HomeNow and its innovative rent and build a deposit model is proving popular

The privately funded HomeNow rent to buy scheme aimed at getting people on the property ladder while providing a return for investors is getting good reviews.

The business, which seeks to offer an alternative to the bank of mum and dad, helps those in rented accommodation who cannot raise a deposit on a home of their own.

It does this by buying a property that the tenant/would-be buyer sources and it then rents the house to them at a fixed price for a five-year period

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The residents then get a third of the property’s increase in value, if there is any, during their tenure to use as a contribution towards the mortgage deposit for the house.

HomeNow offers a new way of saving for a depositHomeNow offers a new way of saving for a deposit
HomeNow offers a new way of saving for a deposit

If the property price does not rise after five years, there will be no increase in value to share but the tenancy can be extended with a new tenancy agreement and a new rent figure or you can simply hand the keys back and leave.

Jonathan Potter, co-founder of HomeNow, says: “The idea is that residents should feel like homeowners as they are earning equity and ultimately, will hopefully own the property themselves. However, they will still receive the equity if they don't decide to buy.”

The chosen property must be freehold and mortgageable i.e. no mobile homes, park homes or house boats and it must be “old build” not new build and must be of standard construction.

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The tenants must also be in jobs that are likely to see them earning more at the end of the five-year rental term.

The contract is strictly for five years although tenants can end the tenancy after the first two years by giving three months’ notice in writing if they have been unemployed for a period exceeding six months, if they are diagnosed with a serious illness or disability or if they are required to relocate for work.

The company will consider applications from those with an adverse credit history if county court judgements are over three years old and have been settled. It will also consider those who have entered into bankruptcy or an individual voluntary arrangement to avoid bankruptcy as long it is over three years old and if defaulted payments are more than a year old.

If an application is approved, HomeNow will carry out the negotiations with the property vendor, proceed with the purchase, pay the stamp duty, legal and conveyancing fees and then become the landlord.

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The company, which complies with landlord obligations in line with traditional tenancies, says that the deal appeals to anyone spending a disproportionate amount on rent without having adequate funds for a mortgage.

Tenants/residents are given full autonomy from the beginning to treat their property as if they are the owners, which means they can decorate as they wish and carry out home improvements, though they are also liable for repairs.

At the end of the five year term, the first-time buyers will need to find the legal, valuation and mortgage product fees needed to purchase the property.

The scheme covers property acquisition in England and Wales and has properties across Kent, Surrey, Essex, The Midlands and Yorkshire. Individual property values range from £150,000 to £400,000.

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The first five residents/tenants in a HomeNow property have an average accrued equity of seven per cent in their homes, with the first families scheduled to transfer to a mortgage and home ownership from August 2025.

Michael Radford and his fiance from South Yorkshire have opted for the HomeNow deal.

He says: "We came across HomeNow as a result of being unsuccessful in trying to find a house to rent because we own a large dog.

“We found the company via the internet and saw they had really positive reviews. What HomeNow offered us was the opportunity to own our own home.

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“We applied online and a member of the HomeNow team got in touch for an interview to find out more about us, gather information and decide if we were good candidates.

“It was quick and easy and things moved on from there. We were given a price range for the property we could look for and HomeNow called every week to see how we are getting on and if we needed any help.”

The couple opted for a three bedroom, semi-detached house with a garden and a driveway.

Michael adds: “My fiancé and I and our dog have been living in this house for about six months now and we are enjoying slowly making the house into our home."

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HomeNow aims to acquire 5,000 houses within five years and Gareth Ship, Chief Operating Officer of HomeNow says: “We believe that the HomeNow scheme is reforming home ownership in the UK and in doing so will contribute to a new generation of homeowners.”