A friend is looking to get into the property market with a rent-to-buy apartment with Assemble Communities. It sounds too good to be true - what are your thoughts on this type of route to home ownership?
Before we start building you secure a 5-year lease with the opportunity to buy your home at the end of your lease, by paying a 3-month rental bond.
Your home’s purchase price is agreed up front and is calculated as today's price with fixed 1.75% increases per year, until you buy it approximately 7 years later (i.e. 2 years of building and 5 years of leasing). This means you get a foothold in tomorrow’s housing market today, cushioning you from any rapid price increases.
Your rent is agreed up front at a market rate – no more than what you’d be paying around the corner – giving you stability while you save.
Once the build is complete, you move in (so start planning that housewarming)! A 5-year lease means you’ve got time – time to save, plan and get to know your home, your neighbours and your community, before you commit to buy.
If work, life or love take you elsewhere, no problem. You can always sublet your home for up to 2 years or exit the lease as usual after the first 12 months. If you decide to make a more permanent move, you can exit the lease or decide not to purchase at any time. The 3-month rental bond will be returned to you minus the cost of repairing any damage – just like an ordinary rental bond.
After 5 years, of living ‘try-before-you-buy’ style, your space has become home and you decide to take the plunge to buy. The 3-month rental bond is returned and can be used to put towards your home’s purchase price. Any increase in market value above your home’s purchase price is to your benefit.
NOTE: Under the Assemble Model, the rent is agreed up front and is calculated at a market rate via two your choice between two rent structures over the 5-year lease term: incremental rent (commencing rent in year 1 with 2.5% increases per year) and flat rent (fixed rent in each year). Both rent structures result in approximately the same rent over the 5-year lease term. This means you will not be paying any more than you would for an apartment of comparable quality, just around the corner. If your home does not live up to your expectations, you can exit the lease or decide not to purchase at any time. The Assemble Model, therefore, offers more flexibility and no downside, compared to a ‘rent-to-buy’ model.
it reads well.
an article
what strikes me as odd is that this is a Melbourne real estate project where the owner/company seems happy to make a good profit with out trying to gouge everyone in the process.
it is like they are working along the lines of "we will make a decent profit, so let's be happy with that. rather than contributing to the ludicrous housing cost increases that have dominated melbourne for the last 10 years"
it flies in the face of "uber capitalism" and the mind set of melbourne real estate.
i'm having a hard time grappling with it.