Buying Or Selling Property Part 9: Rent To Buy
This is Part 9 of our series on Buying or Selling Property.
Rent-to-buy is an arrangement that provides for the rental of a property for an agreed period.
At the end of the rental period, the renter has an option to buy.
This is appealing for young buyers who are unable to qualify for a bond in the traditional way.
Rent-to-buy provides a window of time in which to build up both a deposit and a healthy credit history.
When tenants rent with a view to owning the home, they are more inclined to keep it in good condition. This benefits the seller.
The buyer and seller agree on the property price up-front so any increases in value would be to the buyer’s benefit.
The benefit to the seller is that he has a reliable and responsible tenant who is paying rent. This would usually cover the bond repayments until the property is eventually sold.
There is a risk involved because the sale only takes place on the transfer of the home. If the tenant decides not to take up the option, the seller may have to find another buyer.
Rent-to-buy offers an alternative to the traditional way of purchasing a home. It’s best to consult a bond originator for this type of transaction.
In Part 10, we’ll take a look at Installment Sale Agreements.
