In simple terms, a rent-to-own property involves the buyer purchasing the property from the developer by making monthly, quarterly or annual payments, as specified in the agreement.

Nowadays, few developers have this type of financial purchase option, such as the example of Dubai South, where the payment plan can last for 10 years after delivery, and villas such as California Village where the payment plan can last for 5 years after delivery, with few other options.

When there is a high demand in the real estate market, it is rare to see a rent-to-own option; however, when there is a high supply in the market, developers will offer rent-to-own as a second option to sell in order to transfer stock, which is more common in projects away from the city, such as Dubai Land.

The rent-to-own trend in real estate can be influenced by various factors that may cause it to rise or fall. Some of the possible causes of rising/declining rent-to-own trends include

Economic conditions, such as job growth, unemployment rates and overall economic stability, can affect rent-to-own trends. In a stable economy with a strong job market, more people may be able to afford the rental option, leading to an increase in this trend. Conversely, in a sluggish economy with high unemployment, fewer people may be able to afford this option, leading to a decline in this trend.

The availability and affordability of housing can also affect the trend towards rent-to-own. If there is a shortage of affordable housing or rapidly rising house prices, more people may turn to rental options as a way to achieve homeownership, leading to an increase in this trend. Conversely, if the housing market becomes over-saturated or house prices fall, demand for rental options may decrease, leading to a decline in the trend.

Interest rates can affect the cost of borrowing to purchase a home, and therefore the attractiveness of rent-to-own. If interest rates are low, people may be more able to afford to buy a home outright, leading to a decline in the rent-to-own trend. However, if interest rates are high, people may prefer to rent-to-own as a way to lock in the purchase price and avoid paying high interest rates, leading to an increase in this trend.

Demographics can also influence the trend towards rent-to-buy. For example, if there is a large population of millennials who are struggling to put a down payment on a home, then more people may turn to rent-to-own as a way to achieve home ownership, leading to an increase in this trend. Conversely, if the population is predominantly seniors who have already purchased a home, there may be less demand for rental options, leading to a decline in this trend.

Buyers interested in rent-to-own options are typically those who want to become homeowners but may not have the financial means to do so immediately.

The rent-to-own option is an attractive option for buyers who are unable to secure a conventional mortgage due to factors such as poor credit, lack of down payment or high debt-to-income ratios.

The types of properties that buyers may be interested in for a rent-to-own arrangement may vary, but they are usually single-family homes or townhouses. Buyers are usually looking for properties that they can eventually own and meet their long-term housing needs.

In some cases, buyers may be interested in larger, more expensive properties such as multi-family dwellings or even rent-to-own options for commercial properties. However, these types of arrangements may be less common and eligibility requirements may be more stringent.

Overall, buyers interested in rent-to-own options are typically looking for properties that meet their current and future housing needs and that they can eventually own.

No particular ethnic group is eager to acquire this product; it depends on who needs it most, although more recently it appears that more Indian, Russian, Pakistani and certain Arab ethnic groups are more often doing so.

In Dubai, is it easier to choose to buy a property on a rent-to-own basis or to buy it with a mortgage from a bank?

Whether you choose to buy a property on rent or buy it with a mortgage from a bank in Dubai depends on your personal circumstances and financial situation. Both options have their pros and cons and ultimately it depends on which is best for the buyer.

For buyers who do not have the financial means to secure a conventional mortgage, rent-to-own is an attractive option as they usually require less upfront costs and may have less stringent eligibility requirements. However, rent-to-own arrangements may entail higher monthly payments and may require buyers to pay a premium for the option to eventually purchase the property.