select
|

Get a foot in the door with rent-to-buy

Although the banks currently have several mortgage products available especially for first-time buyers, it is still difficult for many to qualify for a home loan due to the stringent requirements of the National Credit Act.
 
But this does not necessarily mean that all is lost, says Martin Schultheiss, CEO of Harcourts Africa and rental property management company RentalsDotCom.
 
“First-timers may still be able to realise their dream of home ownership if they can lease a home with an option to buy it at the end of the lease period – or perhaps even sooner, finances and landlord permitting.”
 
He says the best way to create a lease with option opportunity is by searching the “homes to let” ads for a landlord who can be persuaded to give you an option to buy. “And you should be prepared to lodge an option fee that will be forfeit if you do not go ahead with the purchase by the agreed date.”
 
Like any contract, the terms of the lease-with-option will then be negotiable: the length of the lease, the rent and the eventual purchase price of the property – “and the seller may even agree to credit a portion of the rent each month toward the purchase”.
 
The advantages of such an arrangement for potential buyers are of course that for relatively little upfront cash, they can “tie up” a property at an agreed price, and live in it before deciding to buy it.
 
Schultheiss says that there are, however, also advantages for a landlord / home seller in a rent-to-buy scenario: “Tenants are likely to take much better care of the property if they intend buying it, and will have even more of an incentive to do so if part of the rent is going towards their purchase.
 
“Meanwhile, the seller still has a monthly income from the property – and gets to keep the option fee and the property itself if the tenants don’t take up the option.”
 
The potential disadvantages for both parties lie in the possibility of a radical market change before the option to buy is taken up. To avoid the possibility of selling too low – or paying too much – sellers and potential buyers should seek the assistance of an experienced estate agent before settling on the purchase price and drawing up their lease-with-option agreement.
 
ISSUED BY HARCOURTS AFRICA


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 15 Jun 2018
      The second quarter of 2018 has proven to be the turning point for Midrand’s real estate market, especially the upper end which started to waver towards the end of a tumultuous 2017 with a notable drop in both sales and average selling prices.
    • 15 Jun 2018
      According to data recently released by FNB, the average age of a South African home buyer has increased from 38 to 44 this year. In an attempt to help first-time buyers enter the market sooner, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, walks us through the steps of saving for your first home.
    • 15 Jun 2018
      Putting your house on the market can be a stressful process. There are so many decisions to make that will impact how quickly your house is sold and for how much you can sell it for. It’s a serious money game where you can’t afford to make the wrong decision.
    • 14 Jun 2018
      The word tourist describes someone who is visiting South Africa for a limited time and is probably not going to buy a property here – so why is the tourism industry so important to the real estate sector?
    • 14 Jun 2018
      Serengeti Estates has entrenched its status as one of Johannesburg’s most desirable addresses for a spectrum of homeowners with its launch of The Signature Residences, a new cluster village.
    • 14 Jun 2018
      Keen interest shown at an international event in Hamburg last month has revealed that German investors have a surprisingly healthy appetite for South African real estate, especially those in the market for retirement properties.
    • 13 Jun 2018
      Well located urban properties, from that convenient city pad to the family townhouse or the coveted buy-to-let property can provide buyers with great investment returns over the long term. This is according to Fine & Country which have a number of offices in Johannesburg specialising in the sale of urban properties.
    • 13 Jun 2018
      A R200 million 51-unit luxury apartment project on a vacant lot at 169 Main Road Green Point places the capstone on the radical transformation of the stretch between de Waterkant and Glengariff Road.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK