Rent2buy: How it works
Forget about paying back someone else’s bond.
Use your own monthly rent payments to fund not only the purchase of your own home, but also a deposit to put towards the property and reduce your home loan when you eventually apply for a home loan, says de Waal.
Whether you want to sell your residential property or buy a new real estate investment, a house or an apartment, your Property Angel is here to help you find your sparkling home.
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Rent2buy is an initiative that looks to take the financial downside of renting, and instead turn those monthly payments into a positive.
The pre-agreed installment is paid directly to the seller and a portion of the rental is credited towards a deposit received if the transfer is registered; if the transfer is denied, the rental is forfeited as ordinary rent.
Usually, market-related rental is about 75% to 80% of a home loan repayment multiplied by the purchase price, says de Waal, noting that in the Rent2buy scenario the client will pay a rental that is close to a home loan repayment, plus rates, taxes, levies and insurance.
But where do would-be buyers find homes where the current owners are open to this type of deal?
Buyers don’t have to look too far as one developer in Johannesburg’s suburb of Northriding is testing the model.
Robbie Cohen of development firm, Domito, is test driving the Rent2buy product with the company’s maiden Isabel Estate development.
We decided to allocate a number of our units to the Rent2buy model as we see it as a great way to help buyers who can’t afford to buy directly, says Cohen.
We just want to give buyers another option to help them buy their own homes.
Cohen says that despite only launching the Rent2buy model very recently, the developer has already allocated tenancies to interested applicants who are currently going through the Rent2buy application process.
Our clientele are mostly young professionals, 60% of whom can’t buy but would love to live in a high-end estate, he says, noting that those who go through the Rent2buy process are many times more reliable tenants. “They look at the bigger picture because they look after and take more pride in their homes.
Author: Meyer De Waal