Rent with an option to buy: The housing model helping first home buyers into the property market

Saving up a house deposit can take years, and over those years property prices are likely to rise with inflation – making many first home buyers feel like they're chasing shifting goalposts. Do you buy with a smaller deposit and secure a cheaper property? Or do you grow your nest egg and buy your home a few years down the track? What if you could freeze time and buy at an agreed purchase price today, giving you a set goal to work towards?

Thanks to housing models like Assemble, this concept is becoming a reality.

ASSEMBLE launches rent-with-an-option-to-buy model in Australia

Assemble is a housing model that aims to disrupt the property unaffordability cycle by providing more attainable housing finance options, and essentially giving first home buyers the independence and confidence needed to enter the property market. The Assemble team, led by managing director Kris Daff, identified a problem – out of reach house prices and insecure lease tenure. Four years ago, Assemble began researching North American and Western European co-operative development models and decided to launch their own rent-with-an-option-to-buy model in Australia.

“We’ve all watched the housing market become out of reach for many Australians with no option other than the traditional rental market. It’s unusual for renters to be offered leases longer than 12 months; this means many renters are moving every 12 months, which is an incredibly disruptive and stressful living situation.”

Kris Daff, Assemble Managing Director

How does the Assemble model work?

Residents of an Assemble property will be given a secure grace period to decide whether they would like to purchase their home upon lease maturity. If the resident does not wish to buy, they can still get their bond back like a typical lease agreement. However, if they wish to proceed with the sale, then they can secure their home for the sale price agreed to at the beginning of the tenancy – meaning any value increase over the construction and lease period it the buyer’s own financial gain.

“The purchase price is fixed today, so residents know what they can purchase the apartment for in seven years. Given inflation, construction cost increases and property history, we believe our prices are conservative. Even if the property market only increases 4% over that time, residents can expect to be paying 20% less than market averages at the time of purchase.”

Kris Daff, Assemble Managing Director

Tenure certainty a key catalyst behind homeownership

One of the key drivers for owner-occupier buyers to secure property is for the sense of stability it provides. It can be difficult to secure a rental for longer than a 12-month period, making it especially difficult for families with children who attend the local school to constantly relocate, and sometimes property maintenance can suffer if neglected by an unattentive landlord, making the home unpleasant to live in.

“We strongly believe that everyone deserves the opportunity to access stable housing. The stability and certainty of a long-term lease enables residents to stay in one place for a long period, to make connections and establish a network. Things some people take for granted like getting to know the local GP, getting children into schools and making long term friends are more possible when people are provided with tenure certainty.”

Kris Daff, Assemble Managing Director

While buying a home is not an option for a lot of renters in Australia due to the high cost of living and financial stability, rent-to-own options can provide a smoother transition into homeownership even for those who have written off buying in the current property market completely.

Assemble enabled first home buyers Fenella and Lee to break into the property market

CASE STUDY

First home buyers Fenella McGowan and her husband Lee Johnston had been encouraged to explore the option of 'rent-with-an-option-to-buy' by two friends who had already bought into the model. Fenella explained that unless they had looked into this opportunity, they couldn’t have afforded to buy into the current market.

“[Assemble] seemed like the only way my husband could break in to the market to be honest! We were finding saving for an unknown really difficult, especially when you continually see the market prices rise. It can be really demotivating. This gave us the opportunity to lock in a space, in a suburb we love with the knowledge of how much exactly we need to save.”

Fenella McGowan, Assemble property buyer

The couple already lives in Kensington and wanted to remain in the area, so when they heard about Assemble’s new development, they decided to jump at the opportunity and were glad they did.

“Both my husband and I are looking forward to finally owning a space of our own… I’m actually possibly most excited about having a bath! There’s also the added luxury of being able to build up close relationships with your neighbours – something of which can be a little harder when you’re in a stand-alone home. Especially considering we’re expecting our first child; we feel really positive about the added level of security in that sense.”

Fenella McGowan, Assemble property buyer

What added benefits do Assemble homes offer buyers?

1. Financial security

Assemble has worked closely with ANZ to assess the mortgage serviceability of their homes, catering to a household income of $60,000 and upwards – and are also committed to providing at least 70% affordable housing to low- and moderate-income earners.

Buyers will also receive free financial coaching to buyers and explore the possibility of bulk buying discounts for expenses such as energy, data, and groceries with the goal of reducing household expenses by approximately 20%.

2. Ability to customise your home

Even during the rental period, residents will have the freedom to customise their home and won’t need permission for superficial improvements such as interior painting or installing a cat/dog door.

3. Outstanding sustainability credentials

Assemble projects have a goal to achieve a minimum 7-7.5 star NatHERS rating across all developments. Each project also adopts several passive design principles including orientation, shading, cross-flow ventilation and external circulation, green roofs and communal open space.

4. Emphasis on communal space

Assemble has practical community spaces such as workshops, a lending library, edible gardens, laundry and clotheslines, flexible communal rooms with a kitchen, dog washing facilities and kids play areas.

5. Assemble are planning for the future

Assemble Managing Director Kris Daff explains that the team is highly dedicated to future-proofing their properties by negotiating extended warranties and maintenance obligations with suppliers and contractors.

“We ensure the materials we choose are not only beautiful in their design but are also durable, age well and are responsibly sourced.”

Kris Daff, Assemble Managing Director

Lead image: Assemble property buyers, Fenella McGowan and Lee Johnston. Photo: Tom Ross.