Rent to buy?

ei.sdraob

rent to buy us bad idea

there was a house 40 mins from galway we seen, 550K rent to buy over 40 years :eek:

anyways identically designed house, same distance from galway in another direction, 200K to buy

quite a difference eh

stepbar

I repeat....

IT'S ONLY WORTH WHAT YOU CAN RENT IT FOR!!!!!

Again....

IT'S ONLY WORTH WHAT YOU CAN RENT IT FOR!!!!!

Once again.....

IT'S ONLY WORTH WHAT YOU CAN RENT IT FOR!!!!!

So unless you can rent it for upwards on 4k a month, I suggest you run (not walk) away very fast.

jobless

soarer...

have a read of the of the thread below, specifically the paper it links too by Morgan Kelly...
He was one of the few who predicted the bust (in the media) and predicts more to go...

http://www.boards.ie/vbulletin/showthread.php?t=2055777997&highlight=morgan+kelly

if you think it cant fall another 200k then you are opening yourself up for a fall...
if the current rent is 1500 (i doubt it actually is on the open market) then using the calculation, Monthly Rent * 12 * (14 or 16) which i've seen used on other property websites prices the house at below 300k..

katie21

I don't know why people here are trying to put people off the rent to buy idea. For me it seems a win win situation for the buyer. If you decide not to buy this year and instead wait 2/3 years for the market to bottom out then you are paying rent while not being able to save as much towards your deposit. However with the rent to buy idea you can rent your house for 2/3 years and then that money will be your deposit. If the house has decreased in value so much then you can just walk away. The money paid in rent would be the same money you would have spent if just renting normally.
Any1 any ideas if there are any schemes where you can negotiate the price and in 2 years you pay the lower of the current or the price at the time?

murphym7

katie21 wrote: »

I don't know why people here are trying to put people off the rent to buy idea. For me it seems a win win situation for the buyer. If you decide not to buy this year and instead wait 2/3 years for the market to bottom out then you are paying rent while not being able to save as much towards your deposit. However with the rent to buy idea you can rent your house for 2/3 years and then that money will be your deposit. If the house has decreased in value so much then you can just walk away. The money paid in rent would be the same money you would have spent if just renting normally.
Any1 any ideas if there are any schemes where you can negotiate the price and in 2 years you pay the lower of the current or the price at the time?

The contract I am about to sign is for 3 years at todays price with 75% of the rent going towards the deposit. I asked my agent about negotiating the price in 3 years and she basically said the owner must sell for the agreed price (ie not higher) the buyer (me) can negotiate the price but can be told to f#*k off by the seller.

The_Conductor

Thats at least part of the problem- the money you spent 'renting' the accommodation for the 2-3 year period, is not the same as the money you would have spent renting anyhow. There are several schemes where posters in this forum have been able to show agents offering rents at up to 1/3 less than the buy-to-rent amount, often in locations where there shouldn't be massive problems letting the units.

Its not in the developers interests to allow you to renegotiate the sale price 2-3 years down the road- as there is no upside for him/her. They will have been sitting on a depreciating asset for the duration. Nonetheless there are a number of schemes offering something similar to this (notably the Farranfore scheme and several of the schemes in Louth).

The big issue for many people- is:

1. Lending institutions do not count 'rent-to-buy' sums as a deposit.
2. If the price of the property has fallen in the interim- you are stuck with a higher price, and may feel as you've already paid a lumpsum towards the property (your 3 years rent) that you're better off completing anyhow.
3. Your borrowing capacity is determined at a future point in time, on lending criteria at that point in time, on an asset that you have no idea of what the open market selling price is going to be.

There are far too many unknowns there for most people- some people are satisfied enough to run with a scheme like this- others, notably the more risk adverse, run like hell when they look into the detail.

Duckjob

Rent To Buy would be OK if the rents asked were in line with the rental market, but in general they are on the pricey side of it.

So if after renting-to-buy for 3 yrs you decide to walk away, you'll have paid well over the odds in rent than you otherwise would have. I'm guessing this is intentional on the part of the developer so the would-be buyer feels "invested" in the property and is less likely to walk away.

IMO unless you believe the market is at or near the bottom now, you would be better off just renting normally for the 3 yrs and re-assessing the market as you go along.

murphym7

smccarrick wrote: »

Thats at least part of the problem- the money you spent 'renting' the accommodation for the 2-3 year period, is not the same as the money you would have spent renting anyhow. There are several schemes where posters in this forum have been able to show agents offering rents at up to 1/3 less than the buy-to-rent amount, often in locations where there shouldn't be massive problems letting the units.

Its not in the developers interests to allow you to renegotiate the sale price 2-3 years down the road- as there is no upside for him/her. They will have been sitting on a depreciating asset for the duration. Nonetheless there are a number of schemes offering something similar to this (notably the Farranfore scheme and several of the schemes in Louth).

The big issue for many people- is:

1. Lending institutions do not count 'rent-to-buy' sums as a deposit.
2. If the price of the property has fallen in the interim- you are stuck with a higher price, and may feel as you've already paid a lumpsum towards the property (your 3 years rent) that you're better off completing anyhow.
3. Your borrowing capacity is determined at a future point in time, on lending criteria at that point in time, on an asset that you have no idea of what the open market selling price is going to be.

There are far too many unknowns there for most people- some people are satisfied enough to run with a scheme like this- others, notably the more risk adverse, run like hell when they look into the detail.

I will have accumalted 30k which goes into a seperate bank account which at the end of the 3 years is considered the deposit for the mortgage - I have checked this with my bank and my solicitor. The bank does treat this sum of money as the deposit. Maybe some RTB schemes are different than ohters but mine contradicts point 1 above.

katie21

Do you mind me asking what RTB scheme you are going with? what area is the house in? I was looking at the easisteps scheme, it seems to be the most common.

AARRRGH

murphym7 wrote: »

I will have accumalted 30k which goes into a seperate bank account which at the end of the 3 years is considered the deposit for the mortgage - I have checked this with my bank and my solicitor. The bank does treat this sum of money as the deposit. Maybe some RTB schemes are different than ohters but mine contradicts point 1 above.

What happens if the builder goes bankrupt?

murphym7

AARRRGH wrote: »

What happens if the builder goes bankrupt?

There is no builder involved, the house is over 20 years old.

Dub22

Hey everyone, Dont know if anybody will find this in any way useful but decided to post anyway.

I think that with the rent to buy scheme, whether or not it is suitable etc is dependant on each individual's circumstances.

At the moment myself and my partner are renting privately in a not so central area and we're paying €1100 rent on a 2 bed. Which, before anyone says anything, all 2 bed properties in this development are between €1050 and €1150. We have been looking in to rent to buy for the past 5 months or so and are going ahead with a 2 bed apartment quite central to the city. The reason we decided rent to buy is for us is:

(1) that we haven't yet got deposit together due to the fact that we've been renting privately.
(2) Im on a yearly incremental pay scale which essentially means Ill be earning more in 3 years time which increases our affordability.
(3) were both in full time employment, im in a permanent job however partner is private sector therefore anything could happen if economy continues to worsen, therefore with rent to buy, walk away and lose nothing except rent we'd have been paying anyway, if we had a mortgage, unfortunately cant walk away from this as easy.
(4) The rent on our rent to buy property is in line with rent we're paying now.
(5) the rent to buy scheme we're going with; the developer will discount the price by 10% should prices drop and we decide to buy.

There's many more reasons we've decided it's for us but I'm not gonna go on and on here. The main point I think is that it suits some people, doesn't suit others and we could argue about it endlessly but that isn't gonna get anybody anywhere! So best of luck to any prospective rtb purchasers, just make sure to have your solicitor go through the agreement before you sign!:)