Rent to Buy/Own Properties

I feel sorry for the innocent purchasers that enter into these contracts

I see alot of Rent to Own or Rent to Buy properties available. Twenty years ago this was a good thing as property prices rose at 10% so effectively you created 50% value after five years of paying rent and a bit towards your deposit. The way it was structure the owner of the property would get the mortgage payments covered in the Rent to Own Contract over five years, being weekly repayments and then you would pay a premium above the rent as a credit towards your deposit. If you never paid this premium above the rent you had to find the cash difference to settle after five years. As the contracts were conditional throughout the five years the owners never had to pay tax. If the purchaser defaulted on repayments the contract would be cancelled.

Recently I met a landlord that said this is how he makes his money get the rent covered and another payment towards the deposit. If they default, cancel the contract and re enter into another new Rent To Own Contract with another party.

I have heard of some nightmare stories where the purchaser never investigated the true value of the property so paid a premium 3 to 4 years ago. The values dropped so had negative equity couldn't settle or get a lender to finance and lost their deposits.

I saw an advert in the NZ Herald today under Houses For Sale & Wtd

REMUERA $1.35M

Private Sale. Buy now or Rent To Own. Home in Gramma Zone, 4 brm ,2.5 bath in Dromorne Road.

I would love to see how this Rent To Own gets on as it is in the top end of the market, great school zone so they are capitalising on a desperate family needing to relocate into the area with little or no money.

Has anyone else had good or bad experiences with Rent To Buy/Own properties?