Does Rent To Own Have A Credit Check In South Africa?

By Dave Nyam •  Updated: 03/23/24 •  5 min read

Buy-to-let is gradually gaining dominance in the South African property market due to an alternative methodology for the traditional way of purchasing a home, more so for those not readily qualifying for a mortgage. Such an arrangement gives a buyer the right to move into a house first as a tenant, multiplying toward the purchase of that property after an established point in time. It’s a whole new proposition in its sense and a step toward owning for customers who are on their way to building credit or saving for a down payment.

Does Rent To Own Have A Credit Check In South Africa?

This is a method by which some South Africans climb the ladder of owning a home without necessarily going to a bank and applying for a home loan upfront. This gives a potential homeowner a chance to live in a house they might want to own in the future. While an ordinary mortgage application will dig through your credit history and take time before most pre-approvals are made, this is not the case for a definite positive in a rent-to-own contract.

Most rental purchase plans seem to be structured for the protection of the potential buyer: the ability to remain as a rent payer and to be a saver to create a purchasing deposit for the future. A good credit history, however, may work in your favor when the time comes to finance the purchase. This avails the borrowers a window to better their credit scores, save well, and in good time towards a deposit; give them an opportunity to build a robust track record of consistent payments to the advantage of getting a mortgage at the end of the rental term.

While the first rental-to-own agreement does not require a credit check upfront, buyers will likely need one at a later time when a rental-to-own changeover is being made. It is at this point that the credit history accumulated during that period will have its effect.

How Does Rent-To-Own Property Work In South Africa?

According to the Tenants’ Association of South Africa, “rent to buy” works through an arrangement where a tenant agrees to the payment of rent as is the norm but is intertwined with an aspect of buying the house at the end of a certain period. “Here’s how Buy-Now, Pay-Later generally works:

How Do I Qualify For Rent-To-Possess In South Africa?

Being eligible for a rental-to-retain in SA means one has to meet some criteria that might convince an owner that you will be able to buy his/her property by the end of the lease. Meet these criteria before continuing:

Is It Better To Rent Or Purchase A Home In South Africa?

This is quite a big decision when you consider whether to secure/rent a property in SA. Here is the checklist:

Renting

Buying

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