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Rent to Buy Schemes

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  • 12-03-2009 3:47pm
    #1
    Jugs82
    Closed Accounts Posts: 627 ✭✭✭


    I have been seeing advertisments for 'Rent to Buy' schemes for a couple of weeks now

    Its seems that you can rent the house for up to 3 years in most cases, and then use this rent as a deposit to buy the house afterwards if you wish - if not, you just leave and your rent paid is well, rent paid...

    You can then negoiate the price with the seller once the 3 years is up or at any time during the 3 years

    Im in Galway and the areas seem to be around Tuam and Ballinasloe where there are lots of places on the market but i think other developers may use the same tactic in other areas soon

    What does you think - good idea/bad idea - possible catches??
    Im just eager to know more as it appears to be an interesting way of buying your own home, especially if your like me a 1st time buyer


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    #2
    quozl
    Registered Users Posts: 3,308 ✭✭✭quozl


    Bad idea imo.

    I haven't seen one yet where both the rents and the asking price for the properpty are not hugely inflated.

    So you pay extra rent money for a number of years, and then are offered the chance to buy at a ridiculous asking price.

    If you rent a normal market-rate property instead, and put the difference into a savings account, you will have something to your name after 2 or 3 years. Instead of nothing, and extra money wasted.

    IMO it's a scam to trick people into renting developer's huge overhangs at inflated prices.


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    #3
    fergalfrog
    Registered Users Posts: 352 ✭✭fergalfrog


    I think one of the benefits is that you try before you buy. If you have bad neighbours you can just pack up and go.

    Are the schemes only run in bigger developments? Are there detached houses where the owners are offering the same facility?


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    #4
    quozl
    Registered Users Posts: 3,308 ✭✭✭quozl


    Also, another huge problem with them is:

    Who is going to loan you the money to buy the property, if it has dropped below 90% of the developers current asking price?

    I doubt that lenders will have completely forgotten their increases strictness on loan-to-value rates on mortgages that quickly.

    And, considering that I haven't seen a single buy to rent where the current valuation of the property isn't VASTLY inflated, I'm sure you're already in the state where no sane bank would loan you the money to buy it.

    People are already having difficulties getting mortgages against properties sold on the open market. Never mind those valued by the developers at peak boom prices!


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