Govt’s Rent-To-Own Scheme can be a breather for migrants

Spiking property prices and budget constraints usually put migrants in a tight spot. With the government’s rent-to-own scheme they can now opt for an alternative.

Under its National Urban Rental Housing Policy (NURHP), the substitute of homeownership will require an initial sum of investment, for a fixed number of years. In other words, the residential units will be allotted on lease.

Rent-to-own scheme provides migrants with best of both the worlds. If they rent the government housing units for a specific time period and finance the property in installments, they can eventually purchase the unit.

With about 11.09 million vacant homes in urban areas of India (2011 census report), the scheme will help in better property allotment.

The scheme will include the following:

  1. A mutually agreed agreement where the seller will entail the right to charge for the property from the migrant.
  2. The scheme fosters fixed payment plans.
  3. The habitable areas provided in the scheme are mostly around prime cities such as Delhi, Mumbai and Kolkata, with the future scope of expansion into other states.

Objective analysis of pros and cons of Rent-to-own:

One needs to weigh the pros and cons of choosing the rent-to-own agreement over traditional purchasing options.


  1. It serves as a more viable option for people with financial deficit. A rent-to-own house provides ample time for the migrants to collect the amount required for the purchase.
  2. If the preference of residence is not aligned with the current property provided, the contract can be breached and choose for an alternative.
  3. The purchasing price is agreed by both the parties ̶ the owner and the resident, at the time of the contract. The value is fixed and remains unaffected by the fluctuations in the real estate market.
  1. Buyer is given a privilege to decide if he wants to purchase the property after living in it. Thus, autonomy of decision is provided.


  1. The migrant has to provide an initial down payment (deposit) which is a percentage of the selling price for the property.
  2. Requires careful and thorough examination in the choice of contract.

What are agreement options for a rent-to-own scheme for government employees?

A rent-to-own arrangement involves two separate agreements options: one for the rental period (standard lease) and another for the purchase (a lease purchase).

  1. Standard lease agreement gives an opportunity to not be bound for property purchase. He can continue renting till a pre-specified period and can walk out after the agreement expires.
  1. In lease purchase contract, the tenant enters into an agreement which makes him legally obligated to buy the property after the end of the contract period. 

Due diligence

Rent-to-own can be beneficial for the buyer and the property owner, if they abide by their duties and exercise their rights diligently. Buyers will have a chance to experience the ownership of the property while working toward its purchase. The landlords will benefit with steady monthly incomes and an anticipated property purchase.

The buyers should, however, do some prior research and make sure they understand the following before entering into an agreement.

  • The deadlines of providing the due payments
  • The deposit sum and rent payment options
  • How will the ultimate purchase price of the property be determined?
  • How will the tenants exercise their option of purchase?
  • What personal possessions can be brought in the residence?
  • Who is responsible for maintenance, homeowner association dues, and property taxes?
  • Estimate the rent- to-own house.
  • Information on lending opportunities and credit support.

How to decide if rent-to-own house is a good option?

Owning a property can an anxious decision rather than a confident one. A rent-to-own house allows the tenant, who may lack luster credit or finances, a chance to acquire residence ownership.

When entering into this lease agreement, a contract is drafted safeguarding the interest of both buyer and the owner. The agreement clearly states the required sum of deposit and fixed rent rate with mutual agreement of both the parties. The terms of the agreement are negotiable and can be altered according to the convenience and need of the parties involved.

A legal advisor or a professional real estate consultant’s presence is preferred to draft the contract’s terms and conditions.

How promising does the scheme look?

The scheme will expand its housing services for working women and homeless students. Conversion of the slum areas into government owned rental properties, which will further promise “no eviction guarantee” for at least 10 years to the migrants, will be provided by the municipal body. Other fiscal and non-fiscal rebates will also be offered by the government to accelerate construction for rental housing.

Rent-to-own scheme is an effort by the government to help people utilize the properties that have not been utilized. It will prove to be beneficial for people who need a place in the city without investing heavy sum and fix their financing deficit.





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