Rent To Own Philippines

How does Rent-to-own in the Philippines work?

A rent-to-own or lease-to-buy scheme is an agreement made between the renter/buyer and owner/seller, wherein the renter has the option to purchase the property within the agreed period. For example, a condominium in Mandaluyong with a 15,000PHP monthly rental fee can be rented out for 20,000PHP for a rent-to-own scheme within the agreed lease duration. The additional 5,000PHP is the premium rental fee that will make up part of the eventual downpayment when the renter is to buy the property according to the contract. If the renter has paid 24 months of rent-to-own premium fee, they have accumulated a total of 120,000PHP.

What are the benefits of Rent-to-own properties for buyers?

• You get to live in the property for a "test drive" within the agreed period that you are renting it. Should you decide that the property isn't the one for you after the lease duration, you can start to look elsewhere.

• You get to pay a fixed total contract price even if the property's appreciation value happens to spike.

• You have ample time to settle or improve your finances while renting, allowing you to work on your financial health or credit score before the lease duration ends.

What are the things to watch out for in rent-to-own properties?

• You need to work with professionals, such as lawyers or brokers, for a well-drafted contract, which is the key to this kind of scheme. Monthly rental fees plus rent-to-own premium, purchase date, duration of lease term, total contract price, and all other essentials must be covered and finalized.

• You have to plan for the future. Are you going to be able to commit to the monthly payment? How are you going to continue paying should other unexpected circumstances arise (health issues, job issues, etc.)?

• You have to be ready to pay slightly above the regular rental fee for the rent-to-own scheme's premium fee.

• Should you decide not to pursue buying the property after the lease duration, all payments made beforehand, including the premium fee, are forfeited or non-refundable.

• You have to prepare for any appreciation or depreciation value of the property.

• You have to be willing to follow stricter policies, or otherwise, the contract is void.