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most likely the hottest new way of buying a property in 2018, will be an innovative way for home buyers in Gauteng and Cape Peninsula to secure the home of their own choice in the price range from R400 000 to R1. We also created a trust for the purchaser to overcome the National Credit Act (NCA) requirements.” “The seller struggled to sell the property and he found a foreign buyer who came up with a 30% cash deposit, and we prepared an instalment agreement to conclude the deal. “Our most recent instalment sale was for a property of R1.7 million,” says De Waal. “However, we find that more and more sellers, particularly those who own vacant plots, investment properties or holiday homes that they struggle to sell, are prepared to wait for their money, as long as the repayment of the purchase price is well structured and secured,” he says.ĭe Waal says buyers who struggle to raise a home loan, like buyers with low credit scores, or with affordability and revenue streams that a bank would struggle to accept, like self-employed buyers and entrepreneurs who all derive their income for various sources, as well as foreign buyers, are all exploring innovative methods to secure a home loan.
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Few sellers are prepared to wait for an extended time to receive the full purchase price, says De Waal. The answer most likely lies in the reality that most property sellers are just focused on Plan A: to secure a cash or a bond-approved buyer.
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The question thus arises: Why has this not become a plan B for all types of property transactions where a purchaser struggles to secure a home loan? This can almost be seen as the modern-day concept of a “peer-to-peer” type of transaction wherein the finances of a bank are eliminated and the seller and buyer enter their own financing agreement to pay off the purchase price. This concept, however, is still available for all types of properties, however, not for agricultural land. The introduction of the Alienation of Land Act, No 68 of 1981 created a method for a property seller and a buyer to enter into an instalment sale agreement in which the parties agreed to pay off the purchase price of the property over a period of time, usually a five-year period, and in at least two or more instalments. The upside of the Rent2buy concept is that it is a simple process to conclude the agreement,” says De Waal.īack in 1981 when banks and building societies often faced liquidity issues, to secure a home loan an investor often had to make a counter deposit with a bank or building society to match the amount of a home buyer’s loan, says De Waal. The concept of Rent2buy was then developed. “Some 10 years ago we started and fine-tuned the concept of rent-to-own.