Wednesday 29 January 2020

Financial experts wary of dangers in rent-to-buy

RENT-to-buy schemes are designed to allow people to rent their property but with the option to buy it at some point in the future at a price agreed at the time of signing up. It is usually offered for specific new developments.

"In general, I see them as a way of builders getting stock occupied or creating a cashflow and for buyers to potentially get a property, but it tends to happen in schemes that are not selling," says Karl Deeter of Irish Mortgage Brokers.

He also adds that such schemes are not regulated and there are no binding rules about how they work.

It certainly appeals to those who can't scrape together a large deposit as the rent you pay may be offset (in some schemes) against the purchase price if you decide to buy.

But another issue, says Mr Deeter, is that if you decide to buy, it may be difficult to obtain finance according to the standard criteria.

"There is no criterion required for being a renter other than the ability to pay, but are potential rent to buy customers aware of this?"

If you are interested, financial advisor Liam Ferguson suggests making "sure that the contract allows you to walk away without penalty if you choose not to buy at the end of the agreed rental period".

Irish Independent

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