From: Boyler Room
I was recently faxed this article by a tenant in a lease option I had going. Here is the article:
HOME SCHEME WARNING
A housing scheme which the Attorney General says preys on the disadvantaged had been uncovered in Adelaide, reports Eleanor Miller:
A rent-to-buy housing scheme in the northern suburbs is being investigated by the State Government and national consumer and business watchdogs.
Under the scheme, buyers believe they are renting to buy a house but in fact still have to pay a substantial amount of, if not the full, purchase price at the date of settlement, 10-15 years down the track.
Attorney General Trevor Griffin issued a warning in the Legislative Council on November 13 that a rent-to-buy property scheme, copied from interstate, which "significantly disadvantaged purchasers", had started operating in SA (see inset story).
He said the scheme was being investigated by the Office of Consumer and Business Affairs, the Legal Services Commission, the Australian Competition & Consumer Commission and the Australian Securities and Investment Commission. Mr Griffin said he was aware of at least one house being sold in the northern suburbs under this scheme.
"It has been suggested that the vendors may have bought the rights to use the scheme by attending a 'get rich quick' type of seminar touring the state", he said. "What is of greatest concern is that it appears that this scheme deliberately attempts to avoid many of the consumer protection mechanisms provided by a number of SA Acts.
"... the scheme could be said to prey on those in the community who are unable, for whatever reasons, to secure a home loan but nevertheless wish to own a family home.
Both Napier MP Annette Hurley (Labor) and the next Labor candidate for Napier Michael O'Brien said they were aware of at least one resident, in Davoren Park, who had bought through the scheme.
The News Review Messenger attempted to contact the buyer but learned they had left the property after realising the true terms of the sale agreement.
Buyers "thought they were under the impression they were purchasing their house form the time they made the first (rental) payment", Ms Hurley said.
"They thought they were eligible for the First Home Owners Grant and wrote to the Treasurer but he wrote back and said it wasn't mortgage-type agreement."
Inset story:
Attorney General Trevor Griffin described Rent-to-Buy schemes to Parliament:
• Purchase price in today's dollars but purchaser has no ownership rights to property until after settlement.
• Settlement delayed for 10-15 years.
• Purchaser moves in and rents house from vendor until settlement.
• If vendor has mortgaged the property and the mortgagee forecloses prior to settlement, the sale to the purchaser is cancelled, the deposit and all past rental payments are lost and the right to remain in occupation is gone.
• The vendor can cancel contract at any time but the purchaser cannot and must buy their way out of the sale.
• Penalty provisions if settlement brought forward.
• No resale by purchaser prior to settlement.
• Rental payments are not instalments - rent does not come off the purchase price.
• Purchasers not protected by Residential Tenancies Act even though they have a rental agreement.
• Rental payments above true market price.
This is the entire article. It appeared in the "News Review Messenger" but I'm not sure of the edition or date.
Half of those issues brought up by Trevor Griffin are a load of crap. If people ARE doing that then they are not doing it legally, and as a result may end up causing a lot of problems for the rest of us in the near future.
Boyler Room
I was recently faxed this article by a tenant in a lease option I had going. Here is the article:
HOME SCHEME WARNING
A housing scheme which the Attorney General says preys on the disadvantaged had been uncovered in Adelaide, reports Eleanor Miller:
A rent-to-buy housing scheme in the northern suburbs is being investigated by the State Government and national consumer and business watchdogs.
Under the scheme, buyers believe they are renting to buy a house but in fact still have to pay a substantial amount of, if not the full, purchase price at the date of settlement, 10-15 years down the track.
Attorney General Trevor Griffin issued a warning in the Legislative Council on November 13 that a rent-to-buy property scheme, copied from interstate, which "significantly disadvantaged purchasers", had started operating in SA (see inset story).
He said the scheme was being investigated by the Office of Consumer and Business Affairs, the Legal Services Commission, the Australian Competition & Consumer Commission and the Australian Securities and Investment Commission. Mr Griffin said he was aware of at least one house being sold in the northern suburbs under this scheme.
"It has been suggested that the vendors may have bought the rights to use the scheme by attending a 'get rich quick' type of seminar touring the state", he said. "What is of greatest concern is that it appears that this scheme deliberately attempts to avoid many of the consumer protection mechanisms provided by a number of SA Acts.
"... the scheme could be said to prey on those in the community who are unable, for whatever reasons, to secure a home loan but nevertheless wish to own a family home.
Both Napier MP Annette Hurley (Labor) and the next Labor candidate for Napier Michael O'Brien said they were aware of at least one resident, in Davoren Park, who had bought through the scheme.
The News Review Messenger attempted to contact the buyer but learned they had left the property after realising the true terms of the sale agreement.
Buyers "thought they were under the impression they were purchasing their house form the time they made the first (rental) payment", Ms Hurley said.
"They thought they were eligible for the First Home Owners Grant and wrote to the Treasurer but he wrote back and said it wasn't mortgage-type agreement."
Inset story:
Attorney General Trevor Griffin described Rent-to-Buy schemes to Parliament:
• Purchase price in today's dollars but purchaser has no ownership rights to property until after settlement.
• Settlement delayed for 10-15 years.
• Purchaser moves in and rents house from vendor until settlement.
• If vendor has mortgaged the property and the mortgagee forecloses prior to settlement, the sale to the purchaser is cancelled, the deposit and all past rental payments are lost and the right to remain in occupation is gone.
• The vendor can cancel contract at any time but the purchaser cannot and must buy their way out of the sale.
• Penalty provisions if settlement brought forward.
• No resale by purchaser prior to settlement.
• Rental payments are not instalments - rent does not come off the purchase price.
• Purchasers not protected by Residential Tenancies Act even though they have a rental agreement.
• Rental payments above true market price.
This is the entire article. It appeared in the "News Review Messenger" but I'm not sure of the edition or date.
Half of those issues brought up by Trevor Griffin are a load of crap. If people ARE doing that then they are not doing it legally, and as a result may end up causing a lot of problems for the rest of us in the near future.
Boyler Room
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