Interest high in rent to buy

Banks' beefed up home equity rules have sparked a surge of interest in rent-to-buy schemes from would-be homeowners who have good cash flow but can't stump up with a 20 per cent deposit for a mortgage.

In these agreements, a tenant rents a property typically for three years; during or at the end of which they have an option to buy it for a price fixed at the start of the term.

Those in the property industry who provide them say they are win-win arrangements that help prospective buyers into a home.

Auckland-based property investor John May says he recently ran an open home on a rent-to-buy property in Remuera that attracted 30 potential buyers through putting an ad in the paper and a sign out, while a house in the next street being sold traditionally through a real estate agent got no one through the door.

He subsequently ran two more open homes and drew 50 more prospective buyers. And demand is growing, he says.

Rising rents are increasing the appeal of the rent-to-own concept, says market-watcher Kieran Trass.

To read the full NZ Herald article click here

Posted: 25 Jan 2009

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