Isle of Man's new rent-to-buy scheme explained - who qualifies and how it works

A rent-to-buy scheme aimed at helping people struggling to save for a mortgage deposit is expected to begin accepting applications in mid-November.

Chris Lee, founder and chief executive of Own Homes, said the initiative was designed to help people who could afford monthly mortgage repayments but were unable to save enough for a deposit while renting.

Speaking to Isle of Man Today’s Tom Curphey, he said the scheme would allow eligible buyers to move into a selected new-build property while building up the deposit needed to buy it through a conventional mortgage.

The scheme is open to people who live on the Isle of Man or want to live on the island, and is not restricted to first-time buyers. However, the property must be the buyer's main residence, rather than a second home or an investment property.

Mr Lee said the scheme was particularly aimed at people aged between 25 and 35, many of whom still aspired to own their own home but were finding it increasingly difficult to save.

He said: ‘The difficulty is nowadays it's the saving for the deposit. House prices continue to increase, and the difficulty is when you're renting and rent is becoming more expensive than a mortgage.

‘Trying to save towards that deposit becomes quite expensive, and you look at the average cost of a deposit for a first-time buyer. You're talking on the island, £30,000-plus.’

He added that the amount required was taking people a long time to accumulate, with some giving up on the prospect of homeownership altogether.

Under the scheme, buyers will pay an initial administration fee, expected to be about £1,000 to £1,500, alongside a reservation fee and the first instalment towards their chosen property.

The final administration fee is still being worked out, Mr Lee said, as the company continues discussions about the costs involved in acquiring properties on behalf of customers.

Once in the property, buyers will make monthly payments, with a proportion set aside towards their deposit. The aim is for them to have enough saved to secure a mortgage and buy the home within five years.

Mr Lee said the scheme was intended to make those payments work towards homeownership rather than simply covering rent.

‘Essentially, it's using your rent and applying it towards your savings. So it's not dead money from that perspective. It's going towards something,’ he said.

A key feature is that the purchase price will be agreed when the buyer signs up, meaning they will know how much they need to save to complete the purchase.

‘It's not a case of you're chasing your tail and the carrot never gets any closer,’ Mr Lee said.

The scheme is being offered in partnership with island housebuilders Hartford Homes and Dandara, with selected new-build properties priced up to £600,000.

Mr Lee said securing the support of both developers was significant, adding that they recognised the island's housing needs.

‘We definitely have got a housing crisis, and we need more homes, particularly for the younger generations and a working population,’ he said.

Applicants must also demonstrate from the outset that they will be eligible for a mortgage on their chosen property, subject to saving the required deposit.

Mr Lee said the company was working through the final arrangements before applications could open, with the aim of accepting its first applicants in mid-November.

People interested in the scheme can register their interest through the Own Homes website at ownhomes.com/iom.