BE THE BOSS OF YOUR RENT
Staying on rent, it’s time for paying rent to buy
In the traditional route to homeownership, a buyer needs to have sufficient funds for a down payment for an outright purchase of a house. In case, you do not have the funds for down payment, the alternative is to rent the property for a certain amount of time, with the option to buy it before the lease expires.
A rent-to-own agreement is an excellent option for an aspiring homeowner lacking sufficient finances. These agreements give the chance to save money for a down payment while occupying your future ‘own’ house and a percentage of the rent going towards the purchase price, lessening the burden of purchase.
Popular in western countries, this model works on two types of contracts, lease-option contracts and leasepurchase contracts. Lease-option contracts give you the right, but not the obligation, to buy the home when the lease expires. If you decide not to buy the property at the end of the lease, you can walk away without any obligation to continue paying rent or to buy. With lease-purchase contracts, one gets legally obligated to buy the home at the end of the lease, whether you can afford to or not.
THE INDIAN SCENARIO
Rent to Own House scheme passed by the government intends to support migrants that qualify to have an access to houses on rent from the government for a number of years. After this, a migrant can own the property by paying the cost for it in a series of instalments.
Once the act is approved by the Cabinet, individual states should be able to run the scheme on their own terms. This scheme may be a part of Pradhan Mantri Awas Yojana.
The scheme is drafted especially to improve the vacancies in properties around major cities. About 11.09 million homes in urban areas around India were vacant according to a 2011 census report. Also, about 27 percent of people in those urban areas live in rental properties.
By providing the scheme to the public, it will be easier for more of these homes to be filled as needed. Plans to convert slums on government-owned lands into rental properties are also being thrown about. This would include a guarantee where no one would be evicted in the first ten years if this plan is eventually passed and approved upon.