Rent to Buy Policy

1. POLICY PURPOSE

1.1 To outline One Manchester’s (OM) approach to the allocation and management of homes let under the Rent to Buy tenure.

1.2 To ensure homes are allocated and managed in adherence to relevant legislation, policy and guidelines for Rent to Buy by OM colleagues.

2. POLICY SCOPE

2.1 Rent to Buy is a scheme which allows working households to rent a home at an Intermediate Rent providing them with the opportunity to save for a deposit over time to assist with the purchase of a home which does not need to be the one they have occupied.

2.2 Customers rent a property at 80% of the market rent with an option to purchase a property at the end of the initial 5-year rental period, providing the opportunity to OM customers to become homeowners.

3. RELEVANT LEGISLATION & REGULATION

3.1 Homes England Capital Funding Guide.

3.2 The Regulator of Social Housing’s Regulatory Framework.

3.3 Housing Act 1988 and 1996.

3.4 Landlord and Tenant Act 1985 and 1987.

3.5 Deregulation Act 2015.

3.6 Defective Premises Act 1972.

3.7 Law of Property Act 1925.

3.8 Money Laundering Regulations.

3.9 Prevention of Social Housing Fraud Act 2013.

3.10 Data Protection Act 2018.

4. POLICY STATEMENT

4.1 One Manchester operates a fair and transparent regulatory compliant Rent to Buy offer which is open to scrutiny and challenge. OM expects that customers who participate in the offer to proceed to purchase a home. OM approach is guided by the following considerations to deliver the best outcomes for customers

5. MARKETING

5.1 One Manchester may advertise available properties via the website, social media, lettings agents or direct marketing.  A register of interest may be created for any scheme that will be launched and let on a first come first served basis, criteria will be advised prior to launch.

6. ELIGIBILITY

6.1 Applicants must be:

6.1.1 At least 18 years of age.

6.1.2 In a working household.

6.1.3 Able to pay rent and save for a deposit at the same time

6.1.4 Intending to buy a home at the time of initial let.

6.1.5 A first-time buyer or returning to the market following a relationship breakdown.

6.1.6 Not currently be able to buy a property in the open market.

6.1.7 Have the right to rent in the UK.

6.1.8 Not be excluded from the housing register for former tenancy conduct.

6.1.9 Not previously rented under Rent to Buy with OM unless there is an exceptional change in circumstances.

6.1.10 Have a household size at the time of letting that will not exceed the maximum occupancy of the property within the 5-year period.

7. ALLOCATIONS

7.1 Properties will be offered on a ‘first come, first served' basis to the most suitable applicant.

7.2 Properties that are let under Rent to Buy arrangements are not within the nomination rights of local authorities, although OM may choose to work with the relevant local authority to identify potential customers.

7.3 One Manchester will undertake checks including landlord, employer, housing register, credit and identity checks to determine eligibility before a property is allocated.

7.4 An affordability assessment will be undertaken to ensure any tenancy is sustainable and the applicant has the financial space to maintain while saving towards a deposit to buy.

7.5 Applicants who cannot demonstrate they meet the affordability requirements, have previous tenancy conduct issues, or may expose OM to financial risk will not be offered a property.

8. TENANCY

8.1 A deposit the equivalent amount of 5 weeks rent will be required prior to the tenancy commencing. The deposit will be protected in a tenancy deposit protection scheme in line with legislative requirements.

8.2 One month’s rent in advance will be required prior to the tenancy commencing.

8.3 An assured shorthold tenancy agreement for an initial term of 12 months will be granted with a key information addendum to agree the saving expectation. Upon expiry of the 12-month fixed term it will continue on a statutory periodic basis, until ended by either OM or the customer.

8.4 An annual review meeting will be undertaken, to inspect the property, review tenancy conduct, and confirm saving progress against target.  

9. RENT SETTING

9.1 Rents will be set at 80% of market rent, inclusive of service charge.

9.2 An independent RICS valuation will be used to determine the initial market rent value at first let.

9.3 Rent will be reviewed annually on the tenancy anniversary based on September Consumer Price Index (CPI)+1% and should not exceed 80% of market value.

9.4 Upon relet the rent level will be determined by market appraisal or RICS valuation.

10. MANAGEMENT

10.1 Customers can end their tenancy after the initial twelve-month fixed term subject to one months' notice in line with tenancy anniversary dates.  

10.2 A surrender of tenancy within the twelve-month fixed period will be at the discretion of OM, based upon the customers circumstances and may include a request to pay reasonable costs incurred.

10.3 OM will seek to end a tenancy where there has been any breach of the tenancy agreement, such as, but not limited to rent arrears or anti-social behaviour.

10.4 Hardship and arrears will be assessed on the individual circumstances of each customer and a decision on a course of action to be pursued based on customer engagement, needs and ability to resolve. Ultimately, failure to sustain rent payments is a breach of the tenancy agreement and may result in the tenancy being terminated.

10.5 OM will act against any persons attempting to fraudulently obtain a Rent to Buy property or in breach of Prevention of Social Housing Fraud Act 2013.

10.6 Mutual exchange is not permitted for Rent to Buy homes.

10.7 Any property that becomes empty during the initial 5 years from practical completion of the building construction will be relet as a Rent to Buy tenancy for the remainder of the 5-year period. After this period, it will be at OM’s discretion, in line with Homes England requirements to determine the future tenure.

10.8 After the initial 5 years, the Capital Funding Guide gives OM the flexibility to sell or continue letting the property.

10.9 Six months prior to the end of the initial 5-year period, or rent to buy period on relet properties, OM will undertake an ‘option appraisal’ to determine the future tenure of the property.

10.10 Any decision will follow guidance from the Capital Funding Guide, with consideration of customer needs.

10.11 Should the customer not be able or willing to purchase the property outright after 5 years, the following options will be considered, subject to previous tenancy conduct and eligibility.

10.11.1 Continue as Rent to Buy for a set period.

10.11.2 Convert the tenancy to Affordable Rent.

10.12 Where a property becomes vacant after 5 years OM will consider the options to relet as either Rent to Buy or Affordable Rent.

11. SALES

11.1 After the initial 5-year Rent to Buy period customers can request to buy the property outright.

11.2 Properties will be sold at current market value as determined by a RICS valuer instructed by OM.

11.3 OM cannot agree a sale if the value is lower than the build cost of the property, inclusive of HE  grant.

11.4 Rent to Buy customers do not qualify for the Right to Buy, Preserved Right to Buy, Voluntary Right to Buy, or Right to Acquire regardless of any previous tenancies.

12. RESPONSIBILITIES

12.1 The Sales & Commercial Manager will be responsible for the review and update of this document.

12.2 The Director of Customers and the Sales & Commercial Manager will be responsible for monitoring the implementation of this policy.

13. EQUALITY IMPACT ASSESSMENT

13.1 An Equality Impact Assessment (EIA) has been completed and assessed.

13.2 The EIA found that

13.2.1 First Come, First Service application process can directly and indirectly discriminate against people with disability, age, or have communication barriers such as English not being their first language.

13.2.2 OM will ensure reasonable alternative application methods are considered upon request, while ensuring fairness of allocation.

13.2.3 An eligibility and affordability assessment can directly and indirectly discriminate against people with disability, pregnancy and maternity, people close to retirement or households on low incomes.

13.2.4 Requirements in the Capital Funding Guide require OM to allocate to persons in employment. OM will consider additional documentation in support of people due to return to work following a break due to maternity, illness or disability.

14. MONITORING AND REVIEW

14.1 Compliance with this policy shall be monitored by the Sales & Commercial Manager.

14.2 This policy shall be reviewed every 3 years or if further government changes impact this policy

14.3 The Director of Operations is responsible for interpreting this policy where the provisions are unclear or there is ambiguity. Any interpretation will automatically become incorporated into the policy.

14.4 The Officer or Officers operating the policy in practice are responsible for implementing the policy and interpreting the policy giving the words of the policy their common everyday meaning.

15. CONTACT PERSON

15.1 The Sales & Commercial Manager has responsibility for the effective delivery of this policy.

16. ASSOCIATED POLICIES AND DOCUMENTS

16.1 Internal Documents:

• Rent to Buy Allocation Process
• Rent to Buy Key Information
• Rent to Buy Affordability Calculator
• Rent & Service Charge Setting Policy
• Tenancy Fraud Policy
• Repairs Policy
• Anti-Social Behaviour Policy
• Complaints Policy
• GDPR Policy

16.2 External Documents:

• Homes England Capital Funding Guide.