With property prices still sky-high and the cost of living biting, Australian home buyers are hunting for creative solutions in 2025. One option getting more attention is rent to buy (sometimes called rent-to-own). But how does it actually work, and is it a safe shortcut to home ownership – or a risky detour?
Rent to buy is an alternative path to home ownership where you lease a property with the option (or obligation) to buy it later. You pay rent plus an extra amount (the ‘option fee’ or ‘rent credit’) that goes towards your eventual deposit or purchase price.
In 2025, some fintech start-ups and property developers are revamping the model, offering digital platforms for contracts, legal checks, and property searches. However, the fundamentals remain: it’s a hybrid of renting and buying, aiming to help buyers who lack a deposit or can’t qualify for a mortgage just yet.
Rent to buy isn’t a magic bullet, but for certain Aussies it can be a game-changer. Here’s who might benefit — and who should tread carefully:
Advantages:
Drawbacks:
In 2025, ASIC and state governments have flagged a crackdown on ‘predatory’ or misleading rent to buy schemes, with new disclosure rules for developers and platform providers. However, legal protections still vary — so reading the fine print, and seeking independent legal advice, is essential.
This year, several developments are shaping the rent to buy landscape:
Despite the risks, rent to buy is growing in popularity, especially in outer-metro and regional areas where affordability is stretched. But experts warn it’s not for everyone — and a standard mortgage will almost always be cheaper if you can qualify now.
Case Study: OwnHome in Sydney
Sarah, a 32-year-old nurse, used a rent to buy scheme in Western Sydney after being knocked back for a bank loan due to her short work history. Over three years, she paid an extra $600/month in rent credits, which went toward her deposit. When her credit score improved, she was able to secure a mortgage and buy the property at the pre-agreed price — even though the market had risen 12% in that time.
Case Study: Regional QLD
Jack and Priya entered a rent to buy contract in Townsville in 2022, but couldn’t secure finance by 2025 due to rising interest rates. They lost their $12,000 option fee, highlighting the downside risk if personal circumstances or the economy shift.
Always get a qualified lawyer to review any contract — and compare the total cost against other paths to ownership, such as shared equity or low-deposit mortgages.