Mirvac plans rent-to-buy at Claremont

Mirvac is trialling a rent-to-buy initiative at its Claremont by Mirvac development, joining a handful of other developers in Australia to adopt an arrangement that is common in the US and Europe.

Rent-to-buy schemes are designed to help aspiring home buyers who are struggling to get their initial deposit.

At Claremont, the trial will be limited to the first 10 owner occupiers that take it up.

Participants will enter an option to buy and lease their desired apartment, paying a minimum 2.5 per cent option fee.

They can rent their chosen apartment for up to two years while saving for the required deposit.

Should they elect to buy the property at the end of the two-year period, the option fee and fortnightly rental payments will go towards the deposit and stamp duty.

That should allow them to enter into a final purchase agreement under normal finance conditions established with an independent provider.

To further assist financially, rent-to-buy purchasers will not be required to pay strata payments and council rates during their rental period and Mirvac has waived the requirement for a rental bond, leaving purchaser’s responsible for just their utility payments.

The scheme has been introduced at a time when Mirvac is experiencing slow sales at its Claremont project.

It had settled on the sale of 105 of the 233 apartments built at Claremont at the time of its property compendium release in February.

The rent-to-buy scheme comes after Mirvac employed a variation (called The Right Start) at its Leighton apartments project.

The WA government’s Opening Doors scheme, and Apartments WA, both offer a version of the initiative locally.

Some rent-to-buy schemes have attracted controversy because the aspiring home buyers have effectively lost their money rather than gaining a foothold in the housing market.

Under Mirvac’s rent-to-buy arrangement, buyers must prove their ability to pay the fortnightly rental instalments and meet pre-approval qualifications for the mortgage that will commence once the deposit has been saved.

Mirvac said a valuable part of its rent-to-buy initiative was the education it provided to purchasers, including assistance with savings plans and support throughout the sale process.