For many Australians, the dream of homeownership feels increasingly out of reach.
According to recent analysis by the Australia Institute, what once took about six years to save now takes closer to 10 years to reach a 20% deposit for a median-priced home, and longer in high-cost cities like Sydney and Melbourne.
In a market like this, upgraders aren’t immune, and many are looking for smart ways to manage costs and reduce upfront expenses. That’s where understanding your stamp duty options becomes critical.
In this guide, we’ll walk through how stamp duty works for upgraders, what concessions (if any) are available, and how an Aussie Broker can help you find opportunities to save, even when you’re not a first-home buyer.
What is a rent to buy scheme?
A rent-to-buy (or rent-to-own) scheme is a property agreement where you rent a home with the option to purchase it later, typically within two to five years. It’s a hybrid arrangement that blends a lease with a future sales contract.
Unlike traditional renting, these schemes are designed to help renters transition to homeownership without needing a full deposit upfront. They’re generally offered by developers or private vendors, rather than banks or major lenders.
The process typically starts with a lease agreement. Tenants agree to rent a property for a fixed term, often three to five years, while paying rent that’s higher than the local market average.
That extra amount may be credited towards a future deposit, depending on the contract. At the same time, a purchase price is usually agreed upon upfront, allowing the renter to buy the property at the end of the lease period.
This structure is sometimes referred to as lease to own, rent to own, or rent to purchase. Whatever the name, the idea is the same: live in the property now with the potential to buy it later.
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Why are rent to buy schemes popular?
These agreements are particularly attractive to buyers who feel locked out of the property market.
For many, the biggest hurdle isn’t affording the monthly repayments, it’s saving the deposit to get started.
Rent-to-buy offers a potential workaround. It can help renters who:
Are struggling to save a full deposit
Have a limited credit history
Work in gig or contract roles with fluctuating income
Have recently migrated to Australia and aren’t eligible for traditional finance yet
There’s also emotional appeal. The chance to move into your future home now, rather than years down the track, is a powerful motivator.
Some developers have leaned into this, offering rent-to-own arrangements as part of their new-build marketing strategies.
How a rent to buy agreement typically works
The lease period
Most rent-to-buy contracts run between three and five years. Rent is paid as usual, but it’s often higher than standard market rates. The extra amount may be credited towards your eventual home deposit, but only if the contract specifically allows for this.
The purchase agreement
When the lease is signed, the future purchase price is usually fixed, either at current market value or with a built-in premium. This can work in your favour if the property increases in value, but it could cost you if the market softens before you're ready to buy.
Option fees and deposit contributions
Many agreements include an upfront option fee or ask for regular payments above rent. These contributions may be applied toward your deposit but again, only if clearly stated in the contract. If the deal falls through, you might not get these funds back.
Legal obligations
These contracts often shift more responsibility to the renter. You may be expected to cover council rates, maintenance, building insurance, or other costs usually paid by the landlord. This is why legal advice is essential before signing.
Here's a snapshot of how it all fits together:
Step | What happens |
|---|---|
Sign the lease | You agree to rent the home for a fixed period |
Pay rent + extras | Often higher than market rate, with possible deposit credits |
Lock in purchase price | Usually agreed upfront at lease start |
Live in the home | You’re responsible for upkeep and some running costs |
Choose to buy | At the end of the lease, you decide whether to purchase |
The risks and watch-outs
While the idea of rent-to-buy might sound like a solution, there are some serious risks to be aware of:
Overpaying for the property: If property prices fall during your lease term, you could be locked into buying a home for more than it’s worth.
Loss of contributions: Many contracts state that if you choose not to buy, or if you're unable to secure a loan, you forfeit any upfront option fees or rental overpayments.
Limited consumer protection: These agreements don’t fall under Australia’s standard mortgage regulations, so you’ll have fewer formal safeguards.
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Questions to ask before signing anything
Before signing a rent-to-buy contract, it’s crucial to ask the right questions and get answers in writing.
Start by checking if the final purchase price is fixed or negotiable, and whether a portion of your rent is actually contributing to a future deposit.
What happens if you change your mind? Can you exit the agreement, and will you get any money back?
Who sets the final purchase price?
Is legal representation included or required?
Will you still need to qualify for a standard home loan at the end of the lease?
These contracts vary greatly, so never assume anything without legal advice.
Alternatives to rent to buy in 2025
If rent-to-own feels risky or uncertain, there are other ways to get into the market, many of them backed by the government:
First Home Guarantee: Allows eligible buyers to purchase with just a 5% deposit and no lenders mortgage insurance.
Family Home Guarantee: Offers support for single parents with only a 2% deposit required.
Shared equity schemes: Involve co-ownership with a government body or institutional partner, helping reduce both deposit and mortgage size.
Guarantor loans: Enable a family member to help secure your loan and unlock better borrowing conditions.
Aussie Buyer’s Agents: Help you identify legitimate alternatives, including off-market properties or homes with flexible terms, without locking you into high-risk contracts.
FAQs about rent to buy in Australia
Is rent to buy legal in Australia?
Yes, but it's not regulated like standard mortgages. Protections are minimal, so legal advice is essential.
How do I find rent to buy properties?
Most are offered by developers, smaller vendors, or rent-to-own providers. Major banks generally don’t offer these programs.
Are there any government rent to buy programs?
Not currently. Instead, the government offers deposit assistance programs like the First Home Guarantee.
Can I apply for a home loan during or after the lease?
Yes. But you’ll still need to meet lending criteria based on your income, credit history, and property valuation.
Do I get my contributions back if I walk away?
Usually not. Most rent-to-buy contracts state that upfront payments and rent premiums are non-refundable.
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Is rent to buy right for you?
If you’re not quite ready for a traditional mortgage, rent-to-buy can look like a stepping stone.
But in reality, it’s a complex path and often a risky one. If the contract’s not rock solid, you could end up out of pocket without owning a home.
That’s why it’s worth speaking to an Aussie Broker first. They’ll walk you through your options, from government-backed schemes to creative finance strategies, and help you avoid decisions that might set you back.
Because at Aussie, we’re not just here to help you buy a home, we’re here to help you buy smart.
Ready to explore safer alternatives?
Speak to a broker about safer alternatives to rent to buy.
