Why pay all that money without having an option to purchase the property?
Well, that may be the reason why rent to own agreements came about in the first place. For those who are not familiar with it, Rent to own is an arrangement whereby the renter has an option to buy a property after the lease period. This does not mean the renter is under any form of obligation to buy the property from the owner when the lease expires. If they decide to buy, then they have to pay the owner the amount agreed at the inception of the agreement otherwise, they vacate the property.
Rent to own agreements are not very common in Nigeria. Most property development companies usually have an arrangement whereby a potential buyer pays a certain amount for contribution and then spreads the balance over a period of 24 months at most. This arrangement thrives because the private sector is perhaps more vested in the real estate market than the government.
Some state governments and federal government bodies have embarked on some rent-to-own. Lagos state in particular has been heavily invested in solving the housing challenges in the state and rent-to-own housing schemes are one of the ways they are doing that. An individual enters and winners are picked at random to apply under the scheme. They are then required to present certain documents like tax clearances, NIN, employment details and other necessary documents to get an approval plus a 5% contribution for a property allotment. The balance is then spread over a period of 10 years. In addition to this, the government is also planning to come up with a rental scheme for those not interested in buying the property.
Rent to own has the potential to increase home ownership in Nigeria and will be beneficial in the long run if it is properly executed in this market.
