Neil Jenman has campaigned hard against rent-to-buy schemes, exposing them as scams

As the housing affordability crisis has worsened, thousands of people (mostly young couples) have seen their home ownership dreams disappear. Many people have resigned themselves to never being able to buy their own homes. A lifetime of renting seems to lie ahead of them.

But then, all of a sudden, along comes an idea called 'RENT TO BUY'. The spruikers who promote this idea hold themselves out to be 'housing heroes' or 'the battlers' friend.

In truth, these spruikers would be better described as property pawnbrokers because they prey on the poor and less fortunate.

Many spruikers - especially those who call themselves "educators" - have been teaching the rent-to-buy method to wanna-be-rich investors, thereby creating a veritable plague of rent-to-buy spruikers (or 'wrappers' as they are also known).

Neil Jenman has campaigned hard against rent-to-buy schemes, exposing them as scams.

There are three main reasons for Neil's intense dislike of rent-to-buy schemes.

First, the rent that is charged to the battlers is usually far in excess of the market rent.

Second, the price that the battler pays to 'buy' the home is far in excess of the market value.

And, third (and this is the biggest scam/danger of all), the battlers (who are often called 'buyers' when they are, legally, nothing of the sort) have almost no rights. Their most important right, having their name on the title of the property, is denied to them under a rent-to-buy (or 'wrap') arrangement. This means that the buyers can do everything right and if anything goes wrong from the spruiker's end, the buyers lose everything.

For example, the buyers could have paid a deposit, paid their payments on-time all the time, spent thousands of dollars renovating the property. And, yet, because their name is not on the title, if the spruiker does not pay his loan payment, the spruiker's lender will repossess the home and kick out the battling buyer.

The spruikers hit back at Jenman by saying that this third risk seldom happens. But that's like saying that most drink drivers do not get killed. The risk is unacceptable.

FOOTNOTE: There is another terrible twist to the 'rent-to-buy' scheme. Many of the spruikers hope that the battling buyers get behind in their payments. The spruikers can then kick out the battlers, keep all (that's right, all) their money and then go and find some more victims and repeat the process. In the USA, 'rent-to-buy' schemes are often known as 'lease options'. There have been instances where spruikers have 'turned over' the same property to a dozen or more buyers.

Further Warning: Some spruikers involved in 'rent-to-buy' schemes claim to be offering 'vendor finance'. They will claim that the government used to sell properties by offering vendor finance. This is a typical twisted truth. Yes, the government (and even some big developers today) still offer 'vendor finance'. But in these cases, the buyers have their names on the title. Not so with the spruikers.