Rent to buy home is also known as rent to own home or lease option home.  In simple words, it is a legal arrangement to buy a home at a later date at the current price while renting it and making rental payments to the owner under a special agreement.   Your monthly rent for the ‘Rent to Buy’ home may be slightly higher than the normal rental rates due to the addition of the purchasing option value.  This scheme suits those who want to buy a home but do not qualify for traditional forms of funding a home due to various reasons.  It allows the tenant to buy the house in which he already lives in at an agreed price at an agreed future date, which ranges between six months and three years. Since it has both advantages and disadvantages, both parties should scrutinize the contract thoroughly before signing it.   

In this situation you enter into an agreement with the landlord with a set of terms and conditions that differs from a traditional rental agreement.  This is a flexible arrangement for the buyer who lacks the capital to buy it outright or savings for the deposit to finance the purchase. The deposit amount on a rent to buy home is usually between one and five percent of the property value. The agreement allows the potential buyer to occupy the property immediately after signing the agreement and make monthly payments.  A part of the rental payment will accrue towards the down payment for the purchase of the house. Both the parties should sign a lease option which gives you, the renter, the right to buy the house but it is you are not under any obligation to buy it. However, if you change your mind, you will forfeit the amount you have paid towards the deposit. You can make changes to the house and the landlord will pay the taxes and other rates for the house while you are occupying it.  


Benefits of ‘rent to buy’ homes

• The purchase price is fixed which helps you to gain on the equity you build using your monthly payments
• You can also profit from the value appreciation of the property
• A portion of your monthly payment will accrue towards the down payments for purchasing the home and will be deducted from the purchasing price of the property
• This arrangement also allows you the flexibility of deciding not to buy the property but gives you the right to purchase it at an agreed date at an agreed price.
• You get to try and see if the house and the neighbourhood suit you and if they are not you can simply walk out
• The rent to own home gives you the opportunity to rent a property that you will eventually buy at a rate agreed upon now, while building your credit by making regular monthly payments to the landlord
• The landlord pays the taxes and rates for the rent to buy home while you live in it
• You can make modifications to the property while you are occupying the property under the lease option agreement