THE “rent-to-own” model will be expanded in Sydney, offering an alternative pathway to home ownership in the heated market and a rival to the growing build-to-rent market, and one community housing provider is already onboard, looking to provide long-term stable housing to moderate-income Australians.
The average person in Australia currently needs more than 12 years to save up for deposit for their first home, according to the ANZ and CoreLogic. Limited supply, soaring immigration and increasing building costs are all contributing to ongoing growth in house prices.
A potential solution is a rent-to-own or lease-to-own model, which works like cars or mobile plans, where the eligible person can own the property and pay it off over the life of the plan.
The latest offering of the model will be from Ownlea, which was developed by James Alexander-Hatziplis, co-founder and CEO of Place Studio, with the aim of helping younger Aussies get into their first home sooner.
The average Ownlea buyer needs $12,500 to enter the contract, and commits to a five-year term, during which they have the right to buy the property at any time. The rental agreement includes a fixed sum which covers utilities and strata, with rent increases of less than 4% a year. Under the rent and more framework, the tenant will pay the regular rent and are given the option to pay more which can help pay off the home, but are under no pressures to make extra payments.
Place offers special incentives that further reduce the purchase price the more a tenant contributes above their rent.
Ownlea’s pilot project will take expressions of interest in February with construction commencing in mid-2024 at the first development site in Sydney.
Other projects in the rent-to-own mould over the years have included Assemble’s “build-to-rent-to-own” project in Melbourne’s Kensington, where residents also sign a five-year lease over an apartment and have the option to purchase the home at the end of the term, and to which it has since added in the same suburb and elsewhere in inner Melbourne, and Fini Group’s Stirling Cross Apartments in Perth’s Innaloo.
“At the heart of Ownlea’s mission lies the drive to democratise property ownership, by empowering occupants to build equity gradually by leasing with the ability to purchase, rather than renting with no end in sight,” Alexander-Hatziplis said.
Community housing provider Pacific Community Housing is a partner.
Matthew Daniel, director of Pacific Community Housing, said, “Our charter as a community housing provider requires us to be focused on the long-term stable housing needs of lower to moderate-income people in the community, a category which many young people are in as they seek to establish their lives”.
Alexander-Hatziplis said the model is beneficial to investors as well, as Ownlea controls the stock.
“This is beneficial for developers, wholesale and superfund investors, as we provide security along with consistent returns.”
“We believe it is better than build-to-rent, as with Ownlea the occupier has peace of mind with set rents for five years and can build equity.”
