Rent to buy in Canberra

Well this is an old thread, but

miz said :

Fiona, the govvie scheme was the ACT Housing Trust loan scheme. Kate Carnell abolished it. I have been waiting for this govt to reinstate it since it got in. How dumb am I, they are too busy building monuments to themselves and enlisting foreigners to live in Canberra than looking after Canberrans who are already here.

Miz, the government now have an ACT Shared Equity Scheme available through the IMB. Go for it!

nyssa76 – you might find better service by renting directly from a landlord if possible. Owners who rent directly usually, mostly, care about their properties, and will want to fix problems. Not always, but you should be able to tell.

Property managers, on the other hand, hate to bother owners with maintenance costs. Their job is to serve as an extra layer of insulation between tenant and hands-off no-care owners. If they’re any good they’ll find a way to charge you for repairs.

You’ll find people, and self managed super funds, who do rent to own by looking on investor forums like Somersoft. You might even be able to find someone who’ll buy a house of your choosing (rather than something they already have as stock). Those forums will give youy insight into how the deal works from the other side.

You’ll need to accept that you will pay higher than market rent (because this is how you build up enough equity to then go to the banks for a traditional mortgage). The vendor has to make money off the deal somehow, too, so expect the final deal to look something like “finish the deal in five years time, for a guesstimate of the expected value plus a premium, and in the meantime, pay market rent plus enough to build up a 10% deposit.” There are any number of permutations on this, but that’s the basic idea.

The benefits? Well, firstly, you get into the home of your choice sooner, and you get used to paying mortgage-like repayments while building your deposit. You can hang your pictures, have pets – all those things landlords won’t let you do. You can make improvements, and if you negotiate the contract correctly, you might even get some sort of credit for it if you walk away from the contract. If you lose your job or your circumstances change, you can walk away without getting a black mark on your credit rating and without being chased. (Vendor financiers usually don’t mind if you walk because they get to keep the capital you built up, and they probably won’t have a loss to chase unless you damaged the property). Whereas if you walk away from a conventional mortgage in the first couple of years you’re probably going to have some big problems on your hands.

The risks? Well, the big one is, if you miss your payments or walk away, you lose everything you paid. It’s a real risk, but to be honest, I think in the first few years that’s true of most mortgages with low or no deposit. The other risk is that the vendor reneges on the contract in some way. You can minimise that risk by having your solicitor put a caveat on the title.

My view is, rent to own isn’t all bad, but you need a good solicitor to help you make the deal. Also, ask your solicitor which jurisidiction will give you more protection (ACT or NSW) and chose your location accordingly.

you don’t like renting an overpriced hovel so you will buy it for twice what it costs to rent it? that doesn’t seem like a good idea…

some suggestions:
*make yourself familiar with your rights (see tenants union act). if what you say is true you are entitled to compensation–very significant compensation

*look for a different landlord

*if you have to rely on vendor finance you shouldn’t be buying a house.

I believe a good place to start re rent/buy might be a solicitor – they sometimes have clients who are figuring out what to do with inheritances. Plus they deal with property trusts and things … just a thought …

Any of the big 4 banks will give you a loan if you have a 3%-5% deposit and can fog a mirror.

Even better, if you have someone to act as a guarantor, one of Australia’s ever so tightly regulated non bank lenders will give you a 120% loan. So not only do you not need a deposit, they’ll give you a whole bunch of money to buy a new car, a 60 inch plasma TV and renovate your kitchen and bathroom as well.

Alternatively you could find another place to rent for around 3/4 the price you’d spend just servicing the interest on a mortgage.

“Does anyone know where I can start? “

Yes

Save money for a deposit

The rest is pretty simple

Although they do exist nyssa76, I couldn’t recommend enough that you research ‘rent to buy’ before considering such a thing. High risk, really high risk.

“Ridiculous property manager” is a tautology.

Fiona, the govvie scheme was the ACT Housing Trust loan scheme. Kate Carnell abolished it. I have been waiting for this govt to reinstate it since it got in. How dumb am I, they are too busy building monuments to themselves and enlisting foreigners to live in Canberra than looking after Canberrans who are already here.