Rent-To-Buy Real Estate In South Africa

The Story

If you desire to test out a house before deciding to either buy or rent it, then a rent-to-buy property is the way to go.

Definition of rent-to-buy

Just as the name suggests: An owner agrees to sell their property to a tenant on the condition that they agree to sign a fixed-term contract for renting. Buying the property begins after this contract has been fulfilled. Also, a rent-to-buy contract can last for any period. However, owners usually set it up for two years.

Reasons tenants opt for this

Experiencing a product or service before deciding to get it permanently is a concept that also applies in property. Some renters want to assess if a property caters to their lifestyle and whether they can see themselves staying in the place or area for a long-term. For newlyweds and starter families, this is a more fitting option since they want to explore until they find the right home. Their property-buying decision is influenced by location as well as the following:

  • The types of amenities that are nearby
  • What the public transport system is like in the area
  • Whether the area is safe or not
  • What the schools in the area offer
  • The existence of other young families in the area

In terms of judging the property itself, these tenants consider whether the size suits the lifestyle of their family. They judge the space in terms of their interests and activities (will they have enough space for their future children to play, will there be space for their pets etc.)

One other reason tenants choose this option is so that they’re able to save up for a bond in future. In the meantime, they rent until the buying process begins because it is more affordable. By the time they buy they would have saved up enough money.

Reasons owners opt for this

Maintenance is a key challenge for, many if not, all owners that are renting out their properties. Having a rent-to-buy option in place motivates tenants to also maintain the property well since it will be advantageous for them when they buy it.

Though the concept is simple, both the buyer and tenant need to understand what the agreement is all about. A fixed, unchanging contract must be employed so that all parties agree with the terms and conditions indicated. Equally important, the contract needs to be simple to understand and must include details of everything. Among other things, the lease agreement should contain:

  • The duration of the lease
  • If there are any fees that apply to the agreement
  • The title deed of the property once the lease ends
  • What will happen if the tenant doesn’t buy the property

It is crucial to consult with a lawyer if you are an owner who is interested in this option. The property market is a field of possibilities and there are many ways to enter, including rent-to-buy.

If you want to know other ways you can enter into real estate, register for our free property investment webinars.


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