Normal Renting and Rent to Buy (rent-to-own) are different options for those who cannot buy a property immediately. While normal renting generally does not include a purchase option, Rent-to-Buy allows tenants to accumulate credit towards purchasing the property.
FEATURE
INITIAL PAYMENT
FLEXIBILITY
CAPITAL BUILDING
MAINTENANCE & REPAIRS
TAX BENEFITS
STABILITY
FINANCIAL RESPONSIBILITY
MOBILITY
PURCHASE OPTION
SERVICE PROVIDER
NORMAL RENTING
Generally does not require a large initial payment. Does not accumulate personal capital.
Greater short-term flexibility. Possible rent increase.
Does not accumulate capital. No appreciation benefits of the property.
The landlord is responsible. Less control over property conditions.
Not applicable. No tax deductions.
No long-term commitment. Less residential stability.
Less financial responsibility. Dependence on the landlord.
Ease of changing property. Less incentive to improve the property.
No purchase commitment required. No purchase option.
RENT-TO-BUY
Requires an initial option deposit. Part of the rent is allocated to the initial payment.
Allows testing the property before buying. Less flexibility if deciding not to buy.
Capital accumulation towards purchase. Risk of losing the option deposit if not purchased.
The landlord may be responsible for major repairs. Possible shared maintenance responsibility.
Potential tax deductions upon purchase. Tax benefits only upon exercising the purchase option.
Greater long-term residential stability. Longer commitment than traditional normal renting.
Future independence from the landlord. Future financial responsibility.
Motivation to improve the property. Less mobility once the option is exercised.
Purchase option at the end of the contract. Depends on future purchase ability.
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