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
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
        
    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