Those from the lower income segments of the society enter into lease contracts with property owners for their housing needs. While most lease contracts include the provision for the tenant’s preferential right to acquire the property from the landlord at the end of the agreed lease period, only a few cases end up that way.
Why lease-to-own options are failing? This is mainly because of the absence of popular financing programs directed at this type of market. Tenants would need to spare a certain amount from their income to save for paying a down payment to acquire the property at the end of the lease contract. With their meager income, and the lack of forced saving mechanism to achieve that savings goal, tenants end up renewing another lease contract without acquiring the much-needed property.
Another predatory nature of a lease contract is the provision allowing rental hike. A poor tenant would never have the opportunity to be renting forever. As this situation becomes a huge need for low income sectors, it also creates a great opportunity for investment. With the price of monthly rentals almost equal to monthly amortization of low cost housing units, real estate investment directed at this type of market has a wide captive market.
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