A tenant purchase scheme(TPS) is a payment option that allows an investor to acquire property by making installment payments over an extended duration of time, in this case through monthly payment (rent), while getting to enjoy occupation of the property as soon as the arranged deposit is paid.
The model is popularly known as rent-to-own in Kenya and it offers the much needed flexibility for individuals to own property in Kenya. With the rise of affordable housing in Kenya targeting middle class and lower income earners in Kenya, TPS seeks to further help solve the housing problem in Kenya and support the attainment of the Vision2030.
There are very many advantages associated with TPS. Let us explore them and to see how you can take advantage of the rent-to-own model.
Advantages of Tenant Purchase Schemes
- Flexibility on repayment period.
- Low interest rates.
- Minimal requirements.
- In case of default, procedures are flexible and favor the client/tenant.
- Approval process takes less than a week.
- You can own more than one unit.
- Re-sale of property is less stringent and quite fast
Flexibility on Repayment Period
One of the most significant advantages of tenant purchase is the flexibility it offers on the re-payment period. Unlike conventional mortgages that often span several decades, tenant purchase agreements allow tenants to negotiate a comfortable timeline for repaying the property’s purchase price. This freedom enables buyers to tailor the payment plan to their financial capacity and life goals, making the dream of homeownership in Kenya attainable for a broader range of individuals and families.
Low Interest Rates
Tenant purchase arrangements often come with lower interest rates compared to standard mortgage loans. This is particularly beneficial for those who might not qualify for competitive interest rates with traditional lending institutions in Kenya due to credit constraints or financial limitations. The lower interest rates can translate into substantial long-term savings, making the tenant purchase option an attractive proposition for cost-conscious home seekers.
Another significant advantage of tenant purchase is the minimal requirements involved in the approval process. Traditional mortgage applications typically entail rigorous credit checks, substantial down payments, and extensive documentation. In contrast, tenant purchase agreements generally have more relaxed eligibility criteria, making it easier for individuals with less-than-perfect credit scores or limited savings to embark on the journey of homeownership.
Favorable Procedures in Case of Default
Life is unpredictable, and unexpected financial challenges can arise. What sets tenant purchase apart is the understanding and flexibility of procedures in case of default. Unlike traditional foreclosures, where tenants might lose all the equity built up over the years, tenant purchase arrangements often provide more leniency and options for tenants facing financial setbacks. This safety net gives tenants more peace of mind, knowing that they won’t be left with nothing in the worst-case scenario.
Expedited Approval Process
In the realm of real estate transactions, time is of the essence. Tenant purchase agreements boast a significantly faster approval process than traditional mortgage applications. While securing a mortgage can take weeks or even months, tenant purchase approvals can often be completed within a shorter period of time. This accelerated process allows aspiring homeowners to act swiftly and secure their dream property before it slips away.
Ability to Own Multiple Units
For ambitious investors or individuals looking to diversify their real estate portfolio, tenant purchase offers the unique advantage of owning multiple units. Whether for personal use or rental income, the option to own multiple properties through tenant purchase can open doors to numerous wealth-building opportunities and financial flexibility.
Less Stringent and Faster Re-Sale
Flexibility extends beyond the purchase phase in tenant purchase agreements. When it comes to reselling the property, tenants-turned-owners typically encounter less stringent and time-consuming processes compared to conventional sales. This convenience and ease of reselling can be a significant advantage for those who might need to relocate for work or personal reasons, ensuring a smoother transition out of the property if necessary.
TPS/Rent-to-Own in Kenya you an Opportunity to Own a Home
A tenant purchase scheme offers a perfect opportunity to own a home/an investment for any first time home buyer while considering their future and the future of their loved ones.
Under this arrangement the rent you pay goes towards you owning the house in the long run while enjoying the benefits of home ownership such as re-sale of property, renovation and redecorating of property and passive income generation through home businesses such as Airbnb’s. TPS offers this without the stress of paying huge amounts of money per month/ a lump sum and fixed deposit which can be strenuous.
It is the perfect home buying scheme if you’re looking to own your first home in Kenya.