Rent to own housing agreements are known by many names such as Lease Option agreement, Lease Purchase agreement or lease to buy agreement.  This is a contractual agreement between a landlord and a tenant with a set of terms that gives the right or option to the tenant to buy the house at the end of the agreement period.  The tenant has the right to buy the property but does not have to buy it. The landlord must sell it to the tenant only at the price agreed upon at the agreed date in future. In the rent to own housing agreement you are able to occupy the house immediately upon signing the agreement with a small or no down payment. During the renting period you can repair your credit problems and improve your credit rating to qualify for a home mortgage in the two or three years.

The rent to own housing agreements are different from the standard lease agreement in two ways:

1. The buyer has to pay the seller a non-refundable fee called ‘Option fee’.  This is for the exclusive right to buy the house before the expiry of the agreement period.  Bad credit is overlooked and there are low or no down payments for most houses.  The typical option fee is also affordable starting with just $2000 and differs based on the credit history of the buyer and property. This fee will count towards the purchase price of the house when he buys it.  If the tenant decides not to buy the house or if the defaults in payments he forfeits the option fee.
2. The tenant is responsible for the maintenance of the property as he will own it eventually. The seller has to fix any problems in the house before the tenant occupies it. The tenant has to ensure that everything mentioned in the contract are actually in the house. The seller has to pay the tax and holds the title to the property till the end of the term of the rent to buy housing agreement.

The rent to buy housing agreement is perfectly legal.  This is the often the only way to own a house for many Australians.  It is advisable to get the agreement checked by a real estate lawyer to ensure your interests are protected.  You should weigh the pros and cons of this process of buying a house and see if it suits you.  The rent to own housing terms are different and flexible and are agreed upon by both the buyer and the seller of the property.  The process does not involve a broker and is only between the buyer and seller. The agreement must stipulate the price of the house, the duration of the option, the option fee, the rent payments, and also the rent premium to be paid by the buyer. The buyer should be very cautious of any other stipulations and clauses that may go against his interests.

In most cases both parties stand to benefit from property deals that are made under the rent to buy housing agreement.