Lease to own set to help young Aussies get into the property market sooner

A new housing model to be launched in the coming months is aimed at overcoming the affordability hurdle many new home buyers face.

As it currently stands, the average person in Australia will need over 12 years to save for their first home purchase in Sydney.

But with limited supply, soaring immigration and increasing building costs, all leading to growth in house prices, time out of the market can be costly for potential homeowners.

One solution is a lease to own model, which can help some of the nearly 31% or 7.9 million Australian renters get into the housing market sooner.

The lease to own model of Ownlea was developed by James Alexander-Hatziplis co-founder and CEO of PLACE Studio with the aim of helping younger Aussies get into their first home sooner.

“At the heart of Ownlea’s mission lies the drive to democratise property ownership, by empowering occupants to build equity gradually by leasing with the ability to purchase, rather than renting with no end in sight,” says Mr. Alexander-Hatziplis.

Community housing provider Pacific Community Housing is a partner.

Matthew Daniel, Director of Pacific Community Housing, says he is pleased to partner with PLACE to create sustainable pathways for Aussies to get into a new home sooner. 

“Our charter as a community housing provider requires us to be focused on the long-term stable housing needs of lower to moderate income people in the community, a category which many young people are in as they seek to establish their lives,” Mr. Daniel explains.

How does it work?

The lease to own model works like cars or mobile plans, where the eligible person can own the property and pay it off over the life of the plan.

With a car lease, the buyer has a set payment period and a balloon payment at the end. Again, much like a car, Ownlea takes away the initial deposit pressures, with the average Ownlea buyer needing $12,500 to enter the contract.

What does the tenant agree to:

• 5-Year Agreement: You commit to a 5-year term, during which you have the right to buy the property at any time.  This rental agreement includes a fixed sum which covers utilities and strata, with rent increases of less than 4% a year.
• Rent and More: The tenant will pay the regular rent and they are given the option to pay more which can help pay off the home but are under no pressures to make extra payments.
• Incentives that reward homeowners: The more you contribute above your rent, the more you’re rewarded. PLACE offers special incentives that further reduce the purchase price, making owning your own home even more attainable.

“Ownlea’s approach is refreshingly straightforward. When you choose an Ownlea property, you enter into a 5-year agreement. Think of it as your steppingstone to owning your home,” Mr. Alexander- Hatziplis explains.

Beneficial for investors as well

In terms of being different to other housing affordable solutions, Ownlea controls the stock. “This is beneficial for developers, wholesale and superfund investors, as we provide security along with consistent returns.”

“Our committed investors and developers play a pivotal role in in this approach by receiving a set return over the term from a more stable lessor base,” says Mr. Alexander-Hatziplis.

“We believe it is better than build to rent, as with Ownlea the occupier has peace of mind with set rents for five years and can build equity.

“Additionally, local communities benefit through neighbourhood stability and long-term investment, while our network of suppliers and service providers benefit from ongoing collaboration.”

The pilot project will take expressions of interest in February with construction commencing in mid-2024 at the first development site in Sydney.