The global recession is taking a toll in the real estate market in New Zealand too. It is becoming difficult for the average to buy a dream house. The dream of becoming a home owner seems to be slipping from his fingers. Many people are looking at rent to buy as an alternative to buying a home on mortgage. Rent to buy is gaining popularity with people who are either first time buyers or those who are trying to rebuild their lives after a financial crisis. This scheme is gaining popularity not only in the New Zealand but also in many parts of the world. It is mainly focused on people who have not been able to save a deposit for a home or for people with low income or people with poor credit rating who find it difficult to secure finance through conventional means.

With this scheme a buyer who wants to purchase a house can do so over an extended period of 1 to 3 years. Many a times no mortgage is needed during the extended rent to buy period. Many property dealers fix the price at the onset. With this scheme people can move in with in days. This new phenomenon is growing because of the crisis in the real estate business for the past two years. Houses are not being sold as before as prices are stagnant or are falling. This recession in the real estate business has put many property investors in a bind as they had bought houses hoping to sell them fast for a substantial profit. By making an offer to credit part of each month’s rent towards purchase price of the house they make the deal look like you are getting much more than you asked for with your money. It is a real easy way to own a house.

One needs to be very careful while going in with this deal as if things go wrong then you could end up losing everything, the property as well as the deposit that you have been putting for years. There are many cases coming forth where people have been duped with the scheme. The government has mad it very clear that people should not sign the tenancy agreement if they do not understand it. It is very risky for the home owner too for they will end up loosing the house, one should get solid legal advice before entering any such transaction.

 The government welcomed the Tenancy Tribunal decision as it awarded $500 exemplary damages and ordered illegal charges of $7580 to be repaid to a Papatoetoe family caught up in a scheme. They had entered the scheme thinking it was a   ‘rent to buy’ property but in fact gave them no such right. Though the rent to buy is gaining much popularity, there are many cases that are coming into light where people are duped into the scheme. They sign the rent to buy agreement without legal opinion and end up loosing their home