Rent To Buy – South Africa
Rent to Buy
Rent to buy is attractive to young first time home buyers because they frequently have not yet managed to save up a deposit.
Essentially a rent to buy agreement is a two step process where you sign a lease on a property simultaneously with an option to purchase the property in a few years time. The plan being that during the lease period you pay an extra monthly amount (over and above the agreed rental) and this money is set aside as a savings account to build up your deposit.
The difficulty with this process is finding a seller willing to lease his property with a sale at an agreed price at some future date and comes with risks to both the buyer and the seller.
We have an alternate tried and tested solution! The Rent to Buy Property Ladder
The Targer Rent to Buy Property Ladder
Our recommendation to first time home buyers is to follow these steps up the ladder.
- Step 1 Choose the type of property you want to own
- Step 2 Choose where you want to live – Location!
- Step 3 Discover your affordability
- Step 4 Decide on a price range
- Step 5 Discover a townhouse complex that meets these requirements
- Step 6 Sign a lease in a complex that meets your needs
- Step 7 Test drive the complex – Live there for 6 to 12 months.
- Step 8 Use the time to look for a well priced property in the complex
- Step 9 Buy the property
- Step 10 Arrange a 105% bond to cover the entire purchase price plus the transfer costs
- Step 11 When you are ready to move up the ladder to your next, larger property, keep this unit as your first investment property