Just google “rent to buy” and “win-win” – those phrases seem to just go together! It just doesn’t always work out that way in reality.
This is not legal advice and the problems listed here may not be relevant to all deals. If in doubt, please seek legal advice. If you’re already in trouble, also see here for more advice.
Here I look at examples of rent-to-buy and lease option deals, but can’t find any that add up!
Briefly, the possible downsides for buyers or sellers[1] are:
· “Rent to Buy” house deals are complex. Borrowers are almost always unable to get a mainstream mortgage (and some investors promote schemes to people who are bankrupt, or with ‘bad credit’). It is no surprise that faced with payments that well exceed (sometimes double) rent payments, and obligations to pay rates and maintenance, some of these buyers get into trouble.
· Buyers can lose tens of thousands of dollars (and sometimes their first home owners grant) within a few years if the deal falls through because they can’t maintain payments.
The Naysayer 