A rent to buy scheme for first-time buyers who can’t afford a deposit is extending its offer to struggling landlords.
As LandlordZONE reported last month, HomeNow offers tenants wishing to buy their home the chance to earn equity in the property rather than struggling to save while paying rent.
Now, it’s giving private landlords a way to get a regular, above-market income by taking on all responsibility for the management, financing and maintenance costs of their property.
HomeNow will find a suitable resident (this can be the existing tenant), acquire the BTL property into their real estate investment trust (using 50% debt), and pay down the mortgage and associated costs.
Investors receive the rent after fees and costs; the firm charges a fee on investment which is 0.6% of any property it buys and 10% on net rent.
The landlord becomes an investor in the fund, meaning that if the debt on the property is less than 50% they receive a partial exit, after five years, the tenant can buy the property as they benefit from any uplift. Also, the landlord will be able to diversify across all properties owned by the fund (rather than just their own).
As well as the landlord benefitting, tenants receive a third of any house price increase, with the legal right to buy the property from HomeNow and can use their share of any uplift in value as a deposit contribution. The remaining two-thirds goes to the landlord through the fund.
Co-founder Jonathan Potter (main picture, inset) says many buy-to-let landlords have disposed of their properties in the face of increasing tax and regulatory burdens, growing mortgage costs and unmanageable repair bills. “We believe this new scheme will allow them to remain in the sector,” he explains.
“We can reduce costs and management burden, at the same time as increasing returns for landlords on the one hand and home ownership on the other.”
Landlords can apply on the firm's webiste.