What You Don’t Know About Buying Rent-to-Own in the Philippines

Is Rent-to-Own A Smart Deal or Another Horror Story for Filipinos?

Many Filipinos are lured by the term rent-to-own without knowing the potential pitfalls of this kind of agreement. For instance, it could be a misleading marketing strategy as some developers use this term to sell mortgage amortization or installment plans, instead of the actual rent-to-own contracts. If you’re planning to invest in a rent-to-own home, make sure to read this article before you make a decision.

Rent-to-Own Contracts Explained

Understanding the basics is key to making an informed buying decision in real estate. Rent-to-own or lease-to-own is an agreement where a person rents a condo or an apartment for a specific period, with an option to purchase the property before the lease contract ends. Rent credits or a percentage of the monthly rent go to the buying price of the house in case the renter decides to acquire it.
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Filipinos are attracted to rent-to-own homes or condos because it’s a quicker way to own a property if you don’t have enough savings. This is a perfect option for families and young professionals facing financial struggles while trying to achieve homeownership. With lower budget requirements and less stringent credit checks, this is indeed the easiest way to get your dream home.

Dark Sides of Rent-to-Own

The reality, or shall we say the ugly truth, behind rent-to-own properties may shock some people unaware of it. First, unsuspecting buyers think they’ve got the best deal when in fact the overall cost of acquiring a rent-to-own is higher than traditional mortgages. Rent credits in monthly rent payments make it more expensive than regular rental rates.
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Moreover, option fees are non-refundable, which means you lose the money if you don’t purchase the property eventually. You may also lose the chance to buy the house if you violate the conditions or fail to pay the monthly dues. Rent-to-own contracts often oblige buyers to maintain and repair the property within the lease period.

Rent-to-own terms are usually non-negotiable, so you don’t have that much power to negotiate in case there are matters you want to request from the developer. The seller decides on the rent, price, and other conditions, while you have only a small chance to negotiate them. Buyers are also not always entitled to inspect the unit, unlike when purchasing a property outright. Therefore, you don’t have that opportunity to check everything before signing the contract.

Final Thoughts

The best thing to do when investing in a property, rent-to-own or not, is to do due diligence before committing to an agreement. In reality, rent-to-own homes and condos are not for all, but rather a helpful solution to certain individuals only. Always assess your finances and explore other alternatives that can fit your budget. To browse our exclusive listings of condominiums in Baguio City and other properties for sale in the Philippines, visit REALS.PH website and register. We have licensed real estate agents who can help you make informed decisions before investing in a new property.