Pathways Property

New Zealand house prices have skyrocketed over the last decade, making it harder and harder for many people to get into the property market.

Pathways Property, part of the 4 A Better City Trust, in conjunction with Te Tumu Kāinga, are creating rent-to-own opportunities in the Hutt Valley which provide a popular and affordable option for many who wouldn’t normally be able to get a mortgage.

Rent-To-Own Opportunities

What is Rent To Own

The reality is that many New Zealanders aren’t able to achieve homeownership due to bad credit, no credit history, a struggle to save the needed deposit, or lending restrictions implemented by the banks. A way around this is with a Rent to Own Agreement.

Rent to own is an agreement between the Seller, Pathways Property and the prospective homeowner. It gives prospective home owners the right to live in the property as a tenant and then the opportunity to purchase the home they're living in after a predetermined rental period - usually five years, at a fixed purchase price.

These agreements are made to benefit the tenant by providing stable, affordable housing. They are also set up so that should the property rise in value during the tenanted period that the tenants are financially benefited by this too. Pathways Property will then provide expert support as they go through the purchase process.

How to qualify

To achieve this they have eligibility requirements that limit the amount of income and debt you can have.

Be a New Zealand citizen or permanent resident and be connected to an Iwi
Have at least one person in the household in full time employment.
Have manageable debt that can be paid off in five years.
Have an income below a certain threshold, between $70,000 and $120,000 per year before tax.

If you are interested in finding out more or to see if you qualify, please contact Ron on 027 527 0122

How the program works

Once approved the prospective homeowner moves into the home and lives there as a tenant for the rent to own period (usually 5 years).

An Agreement to Occupy is signed, and a bond is paid, providing the tenant the same rights as a Residential Tenancy Agreement but with one key difference: You have the option of purchasing the home at the end of the agreed period if the savings commitment has been achieved.

It is important to note that it’s not a contract to purchase – it’s only an ‘option’. If you find that during or after the rental term that you don’t want to move forward, or your personal circumstances change, you can move out of the property as you would do with any rental.

During the rental period weekly payments are made to Pathways Property. A portion will go towards the “costs” associated with the property, including rates, insurance, general maintenance and mortgage repayments. The other portion will be held by Pathways Property to be used towards the deposit savings goal when the property is purchased by the tenant.

Frequently asked questions

Do I get a share of my house’s value growth?

The property’s capital gains after the first five years go towards the Tenants deposit. That means, if you entered a rent to own agreement on a property initially valued at $500,000 and it increased in value by 5% each year you’d get over $125,000 towards the deposit.

Does my rent go towards the deposit or fees?

A portion of the weekly rent payments go towards the tenants deposit savings programme at the end of the five year period. The other portion goes towards the costs of ownership such as rates, insurance and management fees.

What happens if property prices go down?

The rent to own period can be extended if necessary.

What if I have a low credit rating?

During the rent to own period it is essential that no further debt is incurred. This will mean that by the time the purchase takes place the credit history should be suitably strong enough to achieve a mortgage.

What happens if maintenance is required on the house?

General maintenance will be handled by Pathways Property and the costs covered out of the collected “costs” portion of the weekly rental. Upgrades, damages or larger/non-essential items will be managed on a case by case with the Tenant.

What if I want to leave and not buy the home?

If your circumstances change and you need to end the rent to own agreement this is possible. Your Bond, if needed, any saved deposit will be used to ensure that all rents are covered and any damages remedied. Any remaining bond and deposit will be paid back to you.

Can rents be increased during the 5 year term?

Yes, the weekly rental figure will be reviewed every 12 months and small increases may be required to cover the increases in insurance and rates etc during the rental period with 60 days notice. Pathways Property, and the Maori Trust we are working with, are committed to keeping rent rises to a minimum level.