IS 2023 THE YEAR OF RENT-TO-OWN?
EXAMINING THE CHALLENGES OF HOMEOWNERSHIP AND A POSSIBLE SOLUTION
THE CHALLENGES OF HOMEOWNERSHIP
It is more than just a popular sentiment – homeownership represents real financial security for those who purchase property. For many, it forms a core part of life’s journey. A recent government survey* revealed that 90% of Britons shared the dream of owning their own home, yet 60% of renters and adults believed that they never would.
Several barriers have made homeownership out-of-reach for some, ranging from rising property prices and stagnating wages to a, some would say, outdated mortgage system. The UK is facing an unprecedented homeownership crisis, with no obvious solution. This has given birth to various new homeownership alternatives, the latest being rent-to-own.
44
WHAT IS RENT-TO-OWN? Rent-to-own (using Jrny’s Accelerated Ownership Plan as an example) allows aspiring homeowners to choose their dream home with a 2% deposit, whereby the platform’s funding partner will cash-buy the home and subsequently rent it back to them for a period of three to eight years. A portion of the customer’s monthly payments (about 25%, depending on plan design) go into an ‘Equity Savings’ account, helping them save towards their mortgage deposit. The plan is preparing customers to be mortgage ready and buy the home back from Jrny’s funding partners at a pre-agreed price at the end of the lease.
The model has seen widespread adoption in the US, for example, Divvy Homes and Home Partners of America, both of which have supported thousands of aspiring homeowners. It has proven to be a viable path to homeownership for customers who cannot buy their home using traditional means.
HOW CAN RENT-TO-OWN HELP MORTGAGE ADVISERS? The scheme allows advisers to find a solution for aspiring homeowners who do not fulfil usual criteria. This includes those, despite being credit worthy, who are denied a mortgage from traditional providers as a result of their inability to meet minimum deposit requirements and/or access a sufficient mortgage loan amount due to affordability requirements. Additionally, rent-to-own seeks to help individuals who have been locked out of the standard mortgage system, such as gig-economy workers (**who, it’s estimated, represent 15% of the entire UK workforce today), the self-employed, and even customers who do not yet have the permanent right to remain in the UK.
The goal of the rent-to-own plan is to allow customers to live in their future homes already, while they save up towards affording a mortgage deposit. In the case of Jrny, customers initially need 2% and build up towards a 10% deposit, allowing them time to improve their credit or otherwise prepare for homeownership. Mortgage advisers would benefit throughout the duration of the plan from rent-to-own customers who require protection cover during their tenancy, and the arrangement of a mortgage at the end of it to purchase the home outright.
This is a real opportunity for advisers
to serve more clients through rent-to-own in 2023, when deposit requirements & affordability are likely to continue to be an obstacle to homeownership.
RENT TO OWN WITH JRNY Always speak to a qualified independent financial/mortgage adviser. To get early access and find out more about Jrny, visit its website at
www.joinjrny.com or send an email to
info@joinjrny.com.
For further information please contact Peter Hunt on: 0121 503 0961
www.moneywatchfinance.com
Peter is one of the panel experts for the Grand Designs live TV show and has been recognised in the Times Vouched For guide to the UK’s top rated financial advisers every year since 2019
LIVE24-SEVEN.COM
THE MIDLANDS PROPERT Y GUIDE MONE YWATCH F INANCE
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124
