Example 3


armada lettings

rent-to-own specialists

Example 3 - How rent-to-own works

Steve is a 28 year old office worker living in Bristol and has been renting for four years. He has been saving for a deposit to buy his own place and now has £1,400 in his savings account. He worries that if property prices start to increase again then he will struggle to afford to buy. Without a full 5% deposit Steve simply isn't in a position to buy. However he finds a flat that is available on rent-to-own terms.



  • The property is a 1 bedroom flat in Bristol
  • It is a bit dated inside but has great potential
  • Steve agrees a price of £100,000 for the flat
  • Normal rental price is £520 a month
  • Steve needs a 5% (£5,000) deposit to get a


A rent-to-own agreement for Steve could look

like this:

  • A rent-to-own term of 3 years is agreed
  • Steve pays £620 a month (£520 rent + £100 rent credit). Over a term of 3 years his total rent credit is £3,600 (36 months x £100)
  • Getting started money is £1,400 (paid up-front) - this will go towards Steve's deposit when he buys the flat
  • Adding it all together, Steve has accumulated £5,000 towards buying the flat.

After 3 years Steve has got the 5% deposit needed to get a mortgage. He has also made some changes to the flat - it has had quite a make-over with a new kitchen, bathroom and a great choice of paint colour. The flat now feels modern and comfortable. Steve has added significant value to the flat by being able to make improvements.



But Steve has friends and family that can help...


Steve called in favours from friends and family to get some of the work done and began making immediate improvements to the flat.

He bought an ex-showroom kitchen for £300 which he fitted himself with the help of his plumber friend - looks great!

The bathroom suite was fitted by his plumber friend too, and the room was finished with some great looking tiles which he did himself. All done at a cost of £375.

"Most of the cost to refurbish

a property is labour cost -

if you can do it yourself you

will save about 70%"

By doing the work himself, Steve has increased the value of the flat to £110,000. That is £10,000 more than his agreed purchase price - all his to keep.

Over the 3 year term, property prices in Bristol also increased by 3.5% a year making the flat now worth £122,000.

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