The State With a New Plan to Pave the Way From Renting to Buying

One state is ready to offer renters a fresh path to homeownership through a scheme that leverages new builds.

The South Australian government has launched its Rent-To-Buy Affordable Housing Initiative, which is set to allow long-term renters to buy one out of 100 new homes currently under construction.  

Announced as part of the state’s budget, the initiative will assist long-term renters and key workers who are struggling to break into the property market.  

SA minister for housing and urban development Nick Champion described it as an opportunity to get South Australians “off the rental roundabout”.  

“We know secure and affordable housing is fundamental to strong communities and a thriving economy, and through this scheme, we’re investing in the wellbeing and stability of families across our state,” he said.  

Rent-to-buy, also known as rent-to-own, typically involves a lease agreement that gives tenants the option to buy a property once their lease is over, at a previously-agreed upon price.  

While it isn’t a new concept in Australia, it has seen new iterations over the past few years.  

One example is the build-to-rent-to-own model, which sees new homes specifically built for the purpose of tenants having the opportunity to buy a property, once their lease has ended.  

Developer Assemble has made significant headway in this space through its Kensington projects in Melbourne where rent and purchase prices are fixed for five years.  

Although it has gained traction, some states have introduced new laws to ban certain variations of the model. Victoria, for example, has prohibited most rent-to-buy agreements unless they are by the Homes Victoria, a registered housing association or if the arrangement meets the prescribed requirements set out in the regulations.   

In SA’s case, rent-to-buy can only be offered by the South Australian Housing Trust, which is how this scheme is offered.   

How will the scheme work in South Australia?  

Under the scheme, homes would be rented out to eligible renters for up to three years at 75% of market rent.  

Rent-to-buy allows tenants to lease a property with the option to buy it at a pre-agreed price when the lease ends. Picture: Getty

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To be eligible, tenants must be SA residents, have rented for a minimum of 24 months, do not currently own a property and meet the HomeSeeker SA conditions.  

Once the rental period ends, tenants will have the first opportunity to buy the property they were living in, at a price fixed at the time they first moved in.  

Renters would be pre-qualified to test that they meet the criteria and are expected to have the capacity to purchase the property at the end of the lease. 

According to the SA government, the initiative will be open to all eligible purchasers, but priority will first be given to those who have been employed long-term and have spent a long time in the rental market.  

The launch comes after the state ranked first in the Housing Industry Association’s Housing Scorecard, which provides a half yearly review of residential building conditions in each state and territory.  

SA received a score of 88 out of 100, with the report showing the number of houses commencing construction is now 23.1% above the decade average.  

“This initiative is a great idea and is just one more reason why SA leads the nation for housing market performance and why it has once again topped the HIA Housing Scorecard,” HIA SA executive director Stephen Knight said.  

“It has the potential to be a game changer for getting long term renters into home ownership.”  

Are you interested in buying or building new? Check out our dedicated New Homes section.