The end of easy credit has turned even the affluent into envious have-nots, effectively consigned to a life as a permanent tenant. In the past year, those who believed that the market slowdown would finally bring a home within reach have been shocked to find that mortgage lenders are demanding deposits of as much as 40 per cent for a market-leading rate, with no sign of an easing of these conditions.

With the average price of a home in the UK at £153,046, according to the Land Registry, the deposits routinely required by lenders are many times the average annual salary of £26,020. But first-time buyers need not look on all types of renting resentfully. Increasingly it is looking to be the only solution for the majority who can’t call on the Bank of Mum and Dad, or grandma’s generosity in her will, or a City bonus funds, for cash for a deposit. Housing associations, of which there are more than 1,500 in the UK, have begun to promote “rent to buy” schemes, in which aspiring buyers can let an affordable new-build home for up to five years, while they amass a deposit to secure a loan to buy it — presumably when the market looks healthier and lenders are feeling kindlier.

The government-backed schemes offer discounted rent — of no more than 80 per cent of what tenants would pay on the open market and often less — and some even promise to return some of the rent for use as part of the tenant’s deposit when they graduate to ownership. In most cases, the buyer in such schemes can then expect to to be allowed to buy on a shared ownership basis, purchasing only as much of the property as he or she can afford, and continuing to rent the rest.

Vicky Williams, 28, is one of the beneficiaries of this new breed of affordable housing. In June she became the first resident in the CHIPS development, an iconic scheme in central Manchester, on which Bricks & Mortar reported in March (see panel right). This is the kind of architect-contrived schemes that most first-time buyers would assume was beyond their dreams, let alone their means. Williams, however, who earns £17,500 as a sales support assistant for the Bank of Scotland, is able to rent a one-bed apartment for £440 a month, only £15 more than she previously paid for a “poky, not very nice” flat through a private landlord five miles away in Didsbury.

Williams had originally investigated shared ownership but became nervous when the housing market plunged. When she found Rent to HomeBuy through Plumlife (www.plumlife.co.uk), part of the Great Places housing association, she thought it perfect. “This is as easy as renting and I am under no obligation to buy. If I need more space, I can swap to another apartment,” she says.

This is the key advantage of Rent to HomeBuy: in contrast to many other government-backed schemes it is simple and transparent. Residents must be eligible for affordable housing when they move in (earning less than £60,000 a year is the key criteria, but conditions vary between schemes) but until they choose to buy they are treated as ordinary renters, spared complicated contracts, generally expected to stump up only two months’ rent in advance and able to leave the scheme at any time.

They can choose to buy at any point in the rental period but, until they feel confident, Rent to HomeBuy — as Matthew Harrison, the deputy chief executive of Great Places, says — “allows them some breathing space and time to make a decision while waiting for market conditions to improve”. If those conditions don’t improve, residents have enjoyed a few years of a new home at a discount rent.

The Communities and Local Government Department says that 1,100 aspiring buyers have taken up the scheme since it was quietly launched a year ago. But experts predict that it will become the best-subscribed of the affordable housing offerings in the coming months, as more and more apparently solvent buyers find themselves shunned by lenders. Another government scheme, HomeBuy Direct, grants aspiring buyers an interest-free loan of 30 per cent, but even such a generous contribution to a deposit is no longer enough to satisfy many banks or building societies.

Another high-profile provider, the housing association Places for People (www.placesforpeople.co.uk) — which is offering the scheme on family houses at River’s Gate, a development in Newcastle — has reported that where it has offered rent to buy the take-up has been strong. Yet, despite fierce competition from buyers, the supply of homes should not disappoint: housing associations, which are expecting to score even more housing stock thanks to the Government’s KickStart Initiative for mothballed development sites, are finding themselves unable to sell all their shared ownership units. Rather than leave the homes empty, they are transferring the homes into the Rent to HomeBuy scheme.

But Sue Cocking, the head of affordable housing at Knight Frank, warns that potential applicants should be sure to accumulate a deposit, as keeping a property as a rental home is costly for housing associations. She says: “If the resident is not in a position to buy their home when the five years is up, the housing association may be forced to sell it to someone else.” One housing association, Family Mosaic (www.familymosaicsales.co.uk), has found a way to help tenants, by returning 75 per cent of the rent they have paid as a deposit. In its Beaux Arts Building development in Hackney, East London, this would amount to £16,000 on a £225,000 two-bed duplex rented for two years.

To find Rent to HomeBuy schemes in your area, and to check your eligibility, find your local HomeBuy agent at www.direct.gov.uk

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