How rent to own scheme works? Simple, a property is first rented by the prospective buyer with the intention of buying it at a later stage. The owner of the property agrees to the deal and allows the buyer to live in the house after accepting a down payment; the buyer should pay a rental amount that is slightly higher than the usual home rental rates, as part of the payment goes towards down payment of the property. The down payment is roughly around 5% to 10% of the property value. This payment is a non-refundable security amount taken by the seller, as the house is being used by the buyer. The owner and the buyer decide on the rental amount, down payment and the period of occupancy. According to their understanding a contract can be drafted with the help of a lawyer. This contract should be followed strictly by both the parties to avoid future litigation.

How rent to own scheme works in favour of the buyer? A buyer should think twice before selecting a property. The locality, price, title deed and other related clarifications should be made before entering into the deal. The buyer should study the property and should come to a conclusion after conducting adequate research. There are specialised real estate agents who deal with rent to own properties and they can be approached. Choose a locality that is convenient for everyone in the family. Online real estate portals also offer such schemes. You can search based on locality and price. The powerful search engine pops up countless number of links for you to choose from. It should be borne in mind that the down payment and the rental amount are non- refundable. Hence a buyer should not be in a haste to decide on a house. Apart from other factors price of the property is very important. Consider if you can manage for funds before the stipulated term. Only if you are confident should you sign a rent to own deal. Else forget it! There are many instances where the property is attached by owners due to default payment at the end of the term.

Rent to own scheme is highly beneficial for seller especially in a dull market condition. Sellers are not happy to sell their property during a downward market condition. The reason being the property will not fetch the desired amount. It is at this time that the rent to own deal can be successful. The buyer also is happy as he tends to own a house in instalments and the seller is happy as the house makes money till the markets warm up. The buyer should also keep some cash aside to pay the tax, insurance, maintenance and other house related expenses. While under the rent to own plan the buyer has to pay all the expenses pertaining to the property. So, while calculating the cost it is advised to add these additional expenditures too. How rent to own scheme works depends on cooperation of both buyer and the seller.