Rent to Own

[Harish]

Rent to own schemes are slowly getting popularity in Dubai. Almost 70% of expats who live in Dubai rent due to lack of downpayment or uncertainty on how long they live in Dubai. In these schemes, they need to pay a bit higher rent than normal but they own a property in the longer run. This might be enticing them to go for it. However, the scheme has not gone mainstream yet. Let's see what it's gonna make to the Dubai real estate

 

[FWL]

If landlords/developers are financing these schemes it will simply be a case of selling the property to a home owner as oppose to renting it out. Unless landlords/developers continually replace these properties as they are sold, then the impact from this will be neutral? Or am I missing something.

 

[diyhelp]

When signing up to a rent to buy deal how does this work? Who finances the property? How much extra do you pay on top of your rent? Is it a form of shared ownership or am I getting this all wrong?

 

[Longterminvestor]

This link will give you some useful info on a simialr scheme in the UK:_

https://www.money.co.uk/guides/how-does-the-rent-to-buy-scheme-work.htm

 

[Harish]

When signing up to a rent to buy deal how does this work? Who finances the property? How much extra do you pay on top of your rent? Is it a form of shared ownership or am I getting this all wrong?

You asked the right questions. As far as I know, People who can't afford down payments usually go for this. The extra rent you pay depends on a lot of factors. It can't be a shared ownership. The tenant has no rights on the property until he pays the full amount to own that property. If he is unable to pay the amount, then the owner has the right to sell it for others and he will not return the paid amount to the earlier tenant. They do this by some agreement, I guess (Not sure abt this). This is why most people call this scheme as developer/owner friendly.

Any corrections are welcome. I wrote as per my understanding of the scheme.

 

[Longterminvestor]

Surely if the developer is funding the scheme in Dubai then they are taking on the cost of building the homes and then retaining them for rent to buy participants? Or do they simply refinance the properties when they are complete (banking a paper profit) and retain ownership with a constant flow of rental income until the homes are eventually sold?

I can only imagin socially conscious developers doing this in Dubai - are there many of them around?