Leasing property with an option to buy

Private Property South Africa
Chas Everitt

There are several good reasons to pay a deposit when you buy a home, among them the fact that you will have a smaller bond repayment to make each month and that you will save a mint in interest over the life of your home loan.

However, with property prices and interest rates at their current lows, many buyers who feel they can comfortably afford a monthly loan instalment really don’t want to wait until they have saved up a deposit before getting into the market.

So what should they do, especially when most banks are still very sticky about granting 100% bonds?

Well, one answer is to rent a home now from an owner who is prepared to give you an option to buy it later at a pre-agreed price. And the possibility of this is not as unlikely as it sounds. Remember, many homeowners are only renting out their properties at the moment because they have not been able to sell, and there are those who would be very happy to have the prospect of a sale at the end of a lease, and rental income in the meanwhile from financially-sound tenants who also have an incentive to keep the property in good repair because it is going to become their own.

The advantage of such an arrangement for the prospective buyer/ tenant is that the contract will usually provide for him to buy the property at a pre-agreed price at the end of the lease or sooner – thus fixing the price while allowing sufficient time to save up a deposit.

In addition, landlords who are looking forward to a sale at the end of the lease period might charge a lower rental or perhaps even allow a portion of the monthly rent to be offset against the agreed purchase price, providing the tenant with a readymade deposit at the end of the lease as long as he goes through with the purchase.

Looking for a new tenant?

Advertise your property to rent FOR FREE quickly and easily on our website.

Find out more

Share:

Found this content useful?

Get the best of Private Property's latest news and advice delivered straight to your inbox each week

Related Articles

The average first-time buyer will need 2 years to save for a deposit
According to BetterBond, home loan applications from first-time buyers continue to increase but their success is dependent on how financially disciplined they are.
Buy a house with no deposit
With the holidays over (sorry to burst your bubble!) now might just be the right time to consider buying your home – but what if you aren’t ready with a deposit?
Tenants need to get off the fence
If the experts are to be believed, tenants are going to have to start choosing on which side of the fence they think the grass is greener.
;