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The Pros and Cons of Rent-to-Own Homes in Australia

Written by Dean Arnold
Founder & CEO, PublicSquare
Updated: Sep 17, 2023 | ⏱️ 4-min read
Updated:‏‏‎ ‎
Sep 17, 2023
⏱️ 4-min read

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<h2>Rent to Own 2.0</h2>In a perfect storm of stagnant wage growth and runaway house prices, PublicSquare has reinvented the <a href='/products/rent-to-own-homes'>rent-to-own real estate</a> model from the ground up.<br><br>By disrupting the traditional path to homeownership, we envision an upgraded Aussie real estate market resembling that of the United States, where popular rent-to-buy home providers, such as Divvy and Landis, have already helped make homeownership a reality for tens of thousands of families.<br><br>For homebuyers who don't want to spend the usual ten or more years slaving away for a home loan deposit, Rent to buy homes might be a welcome alternative.<br><br><h2>Looking at the Pros</h2>For most Australian households, even highly paid professionals, saving up a home loan deposit requires an extreme level of discipline they are not accustomed to.<br><br>With an average take-home salary of around $800 per week, rental costs of $600, plus $200-300 in bills & living expenses, there might not be much left over for the great Australian dream.<br><br>With rent-to-own homes, you don't have to spend 5, 10 or even 15 years saving the obligatory 10-20% home loan deposit. <br><br>The beauty of PublicSquare's product is that it allows you to move in immediately and live in your home while you build up a deposit and prepare to buy the home later with the lender of your choice.<br><br>Since 40% of your fixed weekly payments accumulate into your purchase offset, you automatically save up a deposit over time without having to think about it and without the temptation to spend it.<br><br>You can think of it as a forced savings mechanism in an appreciating asset that you can also live in.<br><br>Moreover, with rent-to-own homes, you can lock in a future purchase price, thereby earning the financial upside between the difference in purchase and the actual value of the home.<br><br>As an exclusive feature of PublicSquare — all utilities, including gas, water, electricity, and internet, plus all costs of ownership (council rates, body corps, insurance, and so on) are 100% included, so all you need to worry about is your one fixed weekly payment.<br><br><img src='' alt='The base purchase price of a PublicSquare home increases by just 3.3% per year, which is less than half the national growth rate (5.9% for apartments, and 6.8% for houses, 1993-2018 CoreLogic).' style='width:100%;' /><span class='text-small caption-text text-muted'>The base purchase price of a PublicSquare home increases by just 3.3% per year, which is less than half the national growth rate (5.9% for apartments, and 6.8% for houses, 1993-2018 CoreLogic).</span><br><br><h2>Now for the Cons</h2>House prices don't always go up. For example, if you bought an off-the-plan 1-bedroom apartment in Brisbane between 2013-2016 and sold it within the first five years, you probably would have taken a haircut of around 5-10%.<br><br>Secondly, rent-to-own homes are not as cheap as renting. As a general rule of thumb, you should expect to pay approximately double the market rental rate. <br><br>However, this amount includes all bills, and if you're really serious about buying a home, then you'd have to save up a deposit while renting, which may be more expensive.<br><br>And finally, when it comes to rent to own properties, there is always a lock-up period. <br><br>At PublicSquare, we optimize your weekly payment amount to ensure that you have a high likelihood of reaching a minimum 10% deposit as a combination of contributions and equity in your home after three years, allowing you to switch to a traditional mortgage and complete your purchase.<br><br>And if something goes wrong and you can't or don't want to purchase the home any longer, we also give you the option of requesting the property be sold in the open market, which can potentially earn you a reimbursement of all your contributions to date or even a profit depending on how well the market has performed.<br><br><h2>Summary</h2>Due to increasingly unrealistic mortgage requirements in Australia, rent-to-buy housing solutions by companies such as PublicSquare are helping to bridge the gap between renting and owning.<br><br>Besides letting you move into your own home sooner, rent-to-own homes may provide substantial financial benefits.<br><br>For a full list of all benefits, check out <a href=''>our homepage</a> or visit <a href=''>our helpdesk</a>.
Written by Dean Arnold
Founder & CEO, PublicSquare
About me: Passionate about providing a better path to homeownership and financial freedom. Also interested in technology.

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