Why You Should Get A Rent To Buy Property

Rent to buy property gives people an opportunity to get a house on rent and buy it later

. Most people who do not have the finances to buy a property usually take advantage of this system. The benefit of such properties is that you can find out the responsibilities of owning a property - without actually owning a property.

People who obtain a rent to buy property have an option to save money that can be used to either buy out the property or get a different property. The rent to buy concept has made it easy for tenants to choose and live in a property without becoming owners of the property. This will help first time buyers of the property to understand the advantages and disadvantages of owning a particular property.

There are many advantages of obtaining a property where the option of buying the property is in the hands of the tenant. The biggest advantage to the buyer of a rent to buy scheme is that the property price is fixed. Even if the property appreciates, the buyer is only liable to pay the agreed amount. If the property prices have fallen, the buyer can avoid buying the property. However, if the prices of property have risen, then the buyer can exercise the option of buying the property.

Even though the tenants do not have 100 per cent ownership of the property, they have legal rights over the property. The housing association cannot sell the property unless the tenant has broken the rules of the contract or has failed to exercise the option of buying the property. This legal right over the property will change the view of the tenant towards the property. They will maintain the property and improve on it, thereby adding value to the property.

Another important benefit to the tenant-buyer is that they don't have to go through tedious process of getting their mortgage approved. The discretion to give a property to the tenant-buyer is in the hands of the housing association and not in the hands of a lender. Since they are not dealing with the lenders, buyers of the property need not worry about their credit score. Even if they have a low credit score, buyers can purchase the property as they need to worry about rate of interest charged and the loan they receive. However, the housing association can deny giving the property to the persons having low credit score.

Usually the main consideration is not the credit score but towards the purchase of the house. When a buyer and housing association enter into an agreement, the association is paid an option consideration. This consideration will be adjusted against the final amount that is received from the buyer when the option to buy the property is exercised.

With credit tightening in most economies, the percentage of loans available is likely to reduce drastically. Young people looking to buy properties may not be able to do so because the rate of interest may be high or the loan available may be low. Therefore it is important that buyers are aware of the rent to buy system when they buy property for the first time.

by: Lawrence White

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