Rent to Buy Schemes – What Investors Need to Know | Ep. 253

In this episode, we discuss Rent to Buy schemes and how they have the potential to benefit and harm both the vendor and the potential purchaser.

In a Rent to Buy property-purchasing structure, a vendor will agree to sell a purchaser a property for today's price, but the purchaser does not have to pay for the property for a number of years (e.g. 5 years). Over that time, the purchaser will pay market rent to the vendor, plus an additional amount, which counts as part of the deposit. 

The benefit to the vendor is that they will usually sell the property with a margin (i.e. it won't really be the market rate on today's market). And if the purchaser decides not to settle, the vendor gets to keep the additional rent. 

That can make rent to buy schemes incredibly risky for purchasers, especially lower income purchasers who would typically be targeted by these schemes.

We also mention our property investor quiz, which after answering 7 basic questions will give you a yes, no or maybe answer about whether you are in the position to invest.