Know how You can be the Owner of Your Rented Property
Jun 03, 2017 Home Trading Steps
In typical cases for home purchase, the sale takes place soon after the offer has been accepted and the transaction is completed. Normally a buyer has to put in 20 percent of the total value of the property as the down payment. Then the potential buyers need to have a good credit score to go through the home loan process.
However, there is an alternative to this traditional process and that is known as rent-to-own agreement. As per government’s Rent-to-Own scheme which comes under the National Urban Rental Housing Policy, tenants can rent the property from Government body housing units for a particular period of time and pay the entire value of the property amount in easy instalments. This step would help those working migrants to afford housing who can neither save up front for the down payment nor get a loan from financial institutions due to poor credit scores. The government is also planning to use the government land and slum areas to develop housing with a no-eviction guarantee however this model is still to get a nod from the Cabinet.
Advantages and Disadvantages of rent-to-own properties:
Advantages:
Rent-to-own properties is an alternative and good option for buyers or tenants who are unable to get home loans due to poor credit scores. The period can be utilised for arranging finances and rectify the credit scores.
Buyers sometimes are not sure when to buy the property so they can wait and watch the property prices trend. And till the time they take the final decision they can stay on the same property on rent.
Buyers under this agreement have an option to experience the community and judge if the locality suits their lifestyles.
Disadvantages:
Rent-to-own would be bit costlier as the buyer had to pay the monthly rent and addition cost which will go for the down payment.
Rent-to-own agreement breach may land the buyer in legal troubles.
The selling price of the property mentioned in the agreement would be fixed so the tenant who is waiting for the price correction in the market would be disappointed as he has to pay the determined amount which was finalised during the agreement.
However, there is an alternative to this traditional process and that is known as rent-to-own agreement. As per government’s Rent-to-Own scheme which comes under the National Urban Rental Housing Policy, tenants can rent the property from Government body housing units for a particular period of time and pay the entire value of the property amount in easy instalments. This step would help those working migrants to afford housing who can neither save up front for the down payment nor get a loan from financial institutions due to poor credit scores. The government is also planning to use the government land and slum areas to develop housing with a no-eviction guarantee however this model is still to get a nod from the Cabinet.
Advantages and Disadvantages of rent-to-own properties:
Advantages:
Rent-to-own properties is an alternative and good option for buyers or tenants who are unable to get home loans due to poor credit scores. The period can be utilised for arranging finances and rectify the credit scores.
Buyers sometimes are not sure when to buy the property so they can wait and watch the property prices trend. And till the time they take the final decision they can stay on the same property on rent.
Buyers under this agreement have an option to experience the community and judge if the locality suits their lifestyles.
Disadvantages:
Rent-to-own would be bit costlier as the buyer had to pay the monthly rent and addition cost which will go for the down payment.
Rent-to-own agreement breach may land the buyer in legal troubles.
The selling price of the property mentioned in the agreement would be fixed so the tenant who is waiting for the price correction in the market would be disappointed as he has to pay the determined amount which was finalised during the agreement.
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