In Australia the concept of rent with option to buy has gained much popularity due to the non-availability of traditional finance for home ownership.  The constant rise in interest rates and the ever increasing down payments have made home ownership more difficult.  This is because they either do not qualify for the traditional home loans as they lack the perfect credit rating or they simply want to save for the down payment. This is why fewer and fewer families ever realize the dream of owning a home.  Rent with option to buy program is an ideal solution for people who work towards home ownership within a reasonable period of time. The rent with option to buy program is comprised of two agreements namely the Lease Agreement and the Option to Purchase Agreement. The Lease Agreement is the agreement for rental tenancy with certain terms and conditions for a limited period of time. The Option to Purchase Agreement gives the tenant the right but not the obligation to purchase the house at a pre-agreed price within the agreement period.

The tenant and the owner of the house sign the agreement with specific terms and conditions. There is a fee to exercise the option of buying the house.  The time duration for which the agreement will be in force is specified.  This agreement also contains the purchase price of the house as agreed by both parties.                                                 

Benefits of ‘Rent with Option to Buy’ program:

• The tenant can escape the rent trap and ultimately own the house he has rented
• The rent goes towards the purchase price of the house and is not wasted as in the standard renting process
• There is no threat from the landlord wanting to sell the house and the need to move at unexpected times
• Enjoy full control of the house and there is no need to ask the landlord’s permission to use the house as you like
• The agreement is between the owner of the house and the tenant and there is no bank or financing institution’s involvement
• The rent with option to buy program offers a chance to the renter to repair the credit rating to become qualified for obtaining financing for home ownership
• The rent with the option to buy process allows the renter to plan for a brighter future.

Generally, it takes 1 - 3 years to fulfil the terms of the agreement. The renter can build equity in it and can sell this house at a premium.  As rent prices and home prices will be on the rise in the long run the renter can secure his future will be secured with the equity in your property. The home owners list their properties on the websites dedicated to rent with option to buy program. Those looking to own a house using this process can find the suitable homes and contact the owner.  The agreement signed between the owner and the renter is a legal document.  There is no middleman and no commissions involved.  This program ends the uncertainty of being asked to vacate at unexpected times and fulfilling the dream of home ownership eventually.