Rent to Buy is a viable alternative route to home ownership for low-income working households. Many people aspire to home ownership but believe they can’t due to obstacles like employment or credit issues. This can provide you with the opportunity to save for a deposit to go on and purchase the home in the future. The main attraction of the Rent to Buy scheme is the low barrier to stepping onto the property ladder, providing new-build and existing homes at flexible ownership terms.
There are a number of different names that are used for the Rent to Buy scheme depending on where you live. Also known as (a.k.a.): ‘Try Before You Buy’, ‘Rent Save Buy’, ‘Rent to Own’, and ‘Intermediate Market Rent’ , 'Lease to Buy' , 'Lease to Purchase'.
No two rent-to-buy homeownerships are the same. Below is how ours (and most others elsewhere) works:
In simple terms, this service is targeted at those who ordinarily will not qualify for a traditional home mortgage at the time of applying to buy a house, so our rent-to-buy serves as a bridge between a normal rental and actual home purchase: by so doing, a portion of each monthly rent you pay for occupying any of the available units is set aside as home equity (which you don't get with a normal rental). The minimum amount of your monthly rent set aside as home equity will be known by you and so will the selling price of the property will also be known and kept fixed at the beginning of the rent-to-buy tenancy.
Note also that, the total accumulated home equity is a total of the small monthly portion of your rents set aside AND the small Getting Starting Money (typically around GHS10,000 - GHS20,000, just like paying rent advance in a normal rental setting but this time it's serving as home equity) that you must make available WHEN picking the keys to the property to move-in and not upfront – You don't pay a dime to us UNTIL picking the keys to move-in.
At the end of the maximum of 5yrs rent-to-buy phase (as against 2yrs with a normal rental), you're expected to make a decision to either buy the house or move out, and you have three(3) choices:
1. To either top-up the total accumulated home equity and have the Title transferred to your name. For example, if your total accumulated home equity is GHS40,000 for a GHS120,000 apartment/house, you simply make the GHS80,000 difference available to us immediately, or use the GHS40,000 as down payment for an up to 30-yr mortgage for the GHS80,000 portion as explained in point 2 below...
2. If you don't have theGHS80,000 immediately available, you simply finance the GHS80,000 by upgrading to a our built-in mortgage option, where this time around all your monthly repayments go towards paying off the house, and all towards home equity. Note that, if your net monthly salary at the time of application to buy a house with is above GHS3,000, you may start off right away with the mortgage financing option without having to go through the rent-to-buy phase.
3. If you fail to exercise your rights of first refusal via any of the above two options, you're expected to move out and any accumulated home equity will be lost, as we were unable to market to sell the house to other serious prospective buyers, for the entire time that you were living in the property.
Still don't get it? Don't worry as we provide a final free in-person walkthrough for qualified applicants before signing the paperwork to move-in.
KEY TAKEAWAYS
No Upfront Fees
Unlike other providers who may charge you an upfront fee or payment, you don't pay a dime when buying any of our in-house units until you're picking the keys to your new home. Learn more.
Target Market
Strictly for Ghana Resident SSNIT/Cap-30 Contributing Salaried Workers (Public or Private Sector) and Registered Business Owners of MSMEs. This is for First-time Buyer Owner-Occupiers Only - You cannot rent this out until you've fully paid off this rent -to-buy home. Learn more.
Qualifying Income
We're not oblivious of the fact that salary levels are extremely low and the vast majority of salaried workers earn below the traditional qualifying income levels of a conventional home mortgage option, as It is emerging that 87% of public sector workers earn less than ¢3000 as basic monthly salary (according to SSNIT's own data).
To qualify to use our services, your verifiable net monthly salary must be at least GHS1,500 to qualify to use this service. This GHS1,500 floor could also be the net monthly income of your household (total of that of yourself, spouse, and where applicable children). The maximum household income to qualify for this rent to buy service is GHS5,000 (beyond which you can start off on our in-house direct mortgage option).
Proof of Savings or Liquid Investments
Nobody bought a house empty-handed. Even as you don't pay any upfront fees or deposits with us, you need to show proof of savings and/or liquid investments above GHS10,000 (not money to be paid to us upfront). Any of the following verifiable documentary proof of savings and/or liquid investments will suffice:
- Most recent 12 months Personal Bank Statement in your own name with any of the 23 BoG-regulated universal banks
- Most recent 12 months Money Market Statement from a SEC-regulated institution
- Most recent 12 months Tier-3 Statement from an NPRA-regulated institution
- Most recent 12 months Investment Instrument Statement from an NIC-regulated institution
Rent to Buy Homes
The vast majority of available rent to buy homes are new build homes from in-house.
Occasionally, we acquire houses every month and/or quarter from homeowners who need to sell for one reason or another. Often times we remodel the homes to bring them up to date and up to insanely great shape for a new rent to buy tenant / buyer like yourself to move into.
Additionally, you can submit your own externally located property that meets our requirements, for us to acquire and setup rent to buy payment option on it for you.
Rent to Buy Agreements
Usually the monthly rent on a rent to buy house with us is a bit higher than the monthly rent on a non-rent to buy house (because you’re paying for the chance to purchase the house at a pre-determined price which ties the seller down as well). Rent-to-Buy agreements consist of two parts: a standard rental agreement and an option to buy. No two RTB contracts are the same - Our may differ slightly from what may be available elsewhere, including even what the group even offers in the UK. Ghana is a special project for us and would be treated as such.
1. Rental Agreement
2. Option to Buy Agreement
The tenant-buyer cannot sub-let this property. The tenant-buyer cannot sell his option to a third party during the 5-year period under the same or different terms.
The buyer’s right to purchase is valid as long as he/she does not delay his monthly payments. However, there is a provision for a small delay in payments during the option period.
Rental Period
We allow up to 5 years (60 months) rental period for this scheme - Non-renewable. After the time period has elapsed, rent to buy homes give you the option of buying the property outright or upgrading to a conventional mortgage. It is expected that you should have taken this unmatched 60 months period to save up substantial money, either from improved employment, business income or multiple sources of income.
If you choose not to purchase the property however, or are financially unable too, then you must move out of the rented accommodation after five years (60 months).
Monthly Rent (MR)
The annual normal rent is usually around 5-10% of selling property price. So for example, for our starter home of GHs120,000, the annual rent will be within GHs6,000 - GHs12,000 -- monthly rent being within GHs500 - GHs1,000.
Getting Started Money (GSM)
This is usually, 6-24 months of monthly rent (MR). So for the example above, the GSM for a GHs120,000 rent to buy home will be within GHs3,000 and GHs24,000.
Option Payment (OP)
This is usually a minimum of 20% of the Monthly Rent (MR). So for a monthly rent of GHs500, the Option Payment (OP) will be GHs100.
Buying Option at end of Rental
Anytime, you are ready to exercise your rights to buy, the OP and GSM are used as your home equity, but not the Monthly Rent (MR).
So for example,
The GSM for the GHs120,000 home with GHs500 monthly rent will be GHs3,000 (for 6 months option), GHs6,000 (for 12 months option), and GHs12,000 (for 24 months option)
Home Equity At Rental Expiration (HEARE) will be >>
a. OP + GSM = GHs6,000 (monthly OP of GHs100 times 60 months) + GHs3,000 (for 6 months) = GHs9,000 (represents 7.5% of the original property selling price)
b. OP + GSM = GHs6,000 (monthly OP of GHs100 times 60 months) + GHs6,000 (for 12 months) = GHs12,000 (represents 10% of the original property selling price)
c. OP+ GSM = GHs6,000 (monthly OP of GHs100 times 60 months) + GHs12,000 (for 24 months) = GHs18,000 (represents 15% of the original property selling price)
Summarized in the attached table below, for both One & Two Bedroom Rent to Buy Houses:
A. Computations based on our Starter Price of a ONE-BEDROOM at GHS120,000
Legend:
GSM - Getting Started Money AR - Annual Rent MR - Monthly Rent MO - Monthly Option MP - Monthly Payment OP - Option Payment
You can see all our case studies here for more details and insights.
Exit Options
At the end of the maximum of 60 months (5 years) rental phase, you are expected to exit, via any of the following options:
Option 1:
You are expected to pay the difference of the property in full to complete the sale, i.e.
a. GHs120,000 - GHs9,000 = GHs111,000
b. GHs120,000 - GHs12,000 = GHs108,000
c. GHs120,000 - GHs18,000 = GHs102,000
Option 2:
You use your Home Equity At Rental Expiration (HEARE) as a down-payment for a conventional home mortgage or pension mortgage or family mortgage with us, or with any external lender of your choice.
Option 3:
If you decide not to exercise your rights to buy the home you've been renting for up to 5yrs, then you are expected to vacate the property and you forfeit your GSM and OP (HEARE).
You forfeit your HEARE because it compensates for our inability to increase the monthly rent or market to sell the home for the entire period you were occupying the property, as you benefit from the stable rent and equity build-up up to 5yrs.
Eligibility
You must be a salaried worker (public or private sector) or a registered business owner, who can pay a minimum of GHs500 per month. See more here.
Rent to Buy Homes
All the properties available for rent to buy are all from our property investment portfolio, that are either built for sale, built for rent or acquired from third-parties for our portfolio.
How do I register my interest or signup?
It's free to register your interest or signup. No Upfront Fees Required!!
You just need to pre-qualify by just providing us your proof of employment (appointment/employment letter), proof of steady income (payslip) and government-issued photo ID.
Note that, payslip for CAGD-Paid Government workers generated via gogpayslip.com can be accepted as proof of both employment and income.
Register here. We would provide you your free login details after successful verification and validation of your provided information, to enable you login here to proceed.
Not convinced by rent to buy? No problem, there are alternative home buying options like Conventional Home Mortgages, Pension Mortgages, Family Mortgages, etc available with DCANS Properties LLC directly.