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With the average Sydneysider now taking over 11 years to save up for their first home, lease-to-own housing developments might offer a welcome opportunity to own a deposit-free home.
Australian architectural practice Place Studio is getting ready to launch an innovative housing model, which they believe could provide the nation’s tenants with a solution to the increasingly difficult challenge of home ownership.
Currently, it takes the average Sydneysider 11.4 years to save up for their first home purchase in Sydney. In the meantime, the 7.9 million Australians who rent must pay increasingly high prices to secure a roof over their heads.
Place Studio CEO James Alexander-Hatziplis believes that lease-to-own could offer Australian tenants a fast-tracked pathway into their first homes. He created a unique lease-to-own model, Ownlea, with this goal in mind.
“At the heart of Ownlea’s mission lies the drive to democratise property ownership, by empowering occupants to build equity gradually by leasing with the ability to purchase, rather than renting with no end in sight,” Mr Alexander-Hatziplis said.
“Think of it as a stepping stone to owning your home,” he explained.
According to Place Studio, the lease-to-own model works similarly to car or mobile payment plans, with a significantly reduced deposit, a set payment period, and a balloon payment at the end.
The tenant pays $12,500 to enter the lease-to-own contract, then commits to a five-year term during which time they “have the right to buy the property at any time”.
Rent increases will be capped at 4 per cent per annum, and tenants are given the option to pay over the regular rent in order to reduce the purchase price and help pay off the home sooner.
For their pilot project, Place Studio has partnered with Pacific Community Housing, a local Sydney-based provider of affordable housing.
Matthew Daniel, director of Pacific Community Housing, stated that the collaboration with Place Studio was intended to support the long-term future needs of community members.
Mr Daniel said: “Our charter as a community housing provider requires us to be focused on the long-term stable housing needs of lower to moderate income people in the community, a category which many young people are in as they seek to establish their lives.”
Mr Alexander-Hatziplis echoed the sentiment, saying that “local communities benefit through neighbourhood stability and long-term investment”.
According to the CEO, investors could also expect to benefit from the lease-to-own model.
“Our committed investors and developers play a pivotal role in this approach by receiving a set return over the term from a more stable lessor case,” Mr Alexander-Hatziplis said.
“We believe it is better than build to rent as with Ownlea the occupier has peace of mind with set rents for five years and can build equity.”
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