Affordable housing is an ongoing problem in Australia; one that just might find its ultimate solution in the form of a surefire, rent to own model.
Sure, everyone would love to own a home of their own; but with prohibitive home prices making it harder and harder for young people in particular to achieve this dream, the concept of rent to own is gaining popularity in today’s housing market.
The housing development industry is establishing a unique build to rent model; one that industry leaders hope will be subsidised via tax breaks.
This solution is not seen as ideal to many experts, who do not see home rental as the way to go—especially for low income people, and for those seeking deep connections to their residences.
The ultimate solution, in their mind, is one that will guarantee home ownership and security of tenure; an unsubsidised model that is simple, accessible, and all-inclusive, and that can be implemented quickly among many people.
In lieu of totally rejecting the concept of home ownership, they favour a solution that puts this concept in easier reach of more and more people.
This model ideally would combine the flexibility of renting with the more solid base of share ownership. People could own shares in their homes and rent the remainder—establishing a property portfolio of sorts that guarantees security of tenure over one’s residence.
The individual renter could sign an otherwise standard lease that has no term and invest their bond in the form of shares in escrow. Additional shares can be purchased at any time, and market rent will be paid for the home; with all net proceeds pooled and distributed monthly to shareholders.
Yes, that’s right. Each shareholder would receive a monthly dividend cheque, at the same time renting that portion of the residence that they don’t yet own. They buy more as the cheques get bigger, and soon a renter becomes an owner.
From the renter/investor’s perspective, additional benefits would include a steady income stream, liquidity, a diverse stock portfolio, and long-term capital gain. This is also a cost-cutting measure, as it would reduce stamp duty, mortgage interest and establishment costs and real estate agent fees.
What would increase, by contrast, would be the percentage of owner-occupiers filling increasingly stabilised communities where they feel comfortable and satisfied to reside. Young renters can relocate as needed within their portfolio according to life needs, and retirees can tip in their properties to fund their retirement plans. And on a larger scale, new and tightly bonded communities will be formed and wealth will be redistributed. And for many, the dream of home ownership would fully and finally be realised.