In a reaction to recent developments in the property market, the Revenue has amended Chapter 4 of the VAT Manual to outline the VAT treatment of "Rent to Buy" and similar schemes. Such schemes are defined by Revenue as an "attempt by property developers to attract potential purchasers into buying a house by structuring the agreement using an initial period of renting with an option to purchase at the end of the letting period."
The VAT Manual sets out Revenue's view on the VAT treatment of granting an option to purchase, the letting period of the scheme, the treatment of adjustments of deductibility for exempt lettings and the treatment of sale if the option to buy is exercised.
Full details of the updated Chapter 4 are available here