Rent to buy scheme is very common in many states in Australia. Another term that is commonly used in this context is ‘wrapping’ or ‘lease options’.  They are often promoted in many seminars as one of the get-rich-quick schemes.

Comparison of buying properties on ownership basis as well as staying on rental basis:

Before getting in to rent to buy option, it is better to see the pros and cons of owning a house as well as staying on lease options. There are many advantages while buying properties as well as staying on rental basis. Buying a house or owning a property is always an asset for any individual. It tends to give you a sort of independence as well as security. You have full control over the property and there is no liability of paying rents every month. There are many reasons why people choose the rent option. In case of lease option, there is low financial risk and low investment. This helps to build your savings. While staying on lease option, you have the choice to vacate at any time in case you find the surroundings not suitable. The maintenance part is taken care of by the owner and hence there is no question of paying maintenance costs or taxes.

Concept of rent to buy option:

Today there are many options available for individuals to buy properties. There is an option of buying the house with a very small deposit amount and the balance amount is paid as rent. Once the final instalment is paid, the buyer gets the ownership status. This is commonly referred to as ‘rent to buy’ option. One of the most obvious factors while going for this scheme is money factor. There could be reasons for not being able to buy a house or property in Australia. The common reasons could be financial constraints or low income group or mortgage problems. There are many new immigrants who come to Australia for various reasons like education or employment or business. Since they are new to the surroundings, it is ideal to stay on rental basis and then buy a house. It is very difficult for newly arrived immigrants to immediately build up a good credit history. Taking in to consideration all these factors, rent and then buying a property seems to the ideal option.

There is ample time to build their credit history as well as accumulate a good amount of money during the rental period. The rent to buy scheme offers those individuals who are very desperate to own their homes and works like low deposit loans. Before you enter in to this option, it is better to consider a legal advisor and accordingly make the agreement. Make sure that the agreement is a balanced agreement and is agreeable to both the parties. It should not be a one sided agreement. The reason for this is that the lease option agreement may either run for 1 year or 3 years or 5 years depending on both the parties. At the time of lease agreement, the buying price is fixed and if agreeable, an agreement is reached between both the parties. The buying/selling price thereby gets locked. The rent to buy system helps the buyer in buying the property directly from the seller or owner thereby giving the buyer an ownership status without visiting any financial institution.