The state of the housing market makes it very difficult for home buyers who don’t have large savings or parents who can help them out. Ultimately it means that they enter the wealth creation through real estate ownership much later - or never at all - and are unable to climb the economic ladder at the pace of their peers. If this continues, the inequality in our society will inevitably be fueled further.
At Address we want to level the playing field by co-investing and letting new homeowners share a small portion of their home equity in return for a shared appreciation upside (or depreciation downside).
This is an obvious first step in creating a more balanced and liquid housing market for all to benefit from - and at Address we only partner with long-term financing partners that are looking to pair social impact with sustainable financial gains.
Means we want to level the playing field, so more people can get access to the value creation that happens in society through property ownership. We see a great divide widening right in front of us formed by a skewed (real estate) price-to-income ratio - further fueled by a great wealth transfer from boomers to millennial's, which will push many out of the market and leave them in sub par housing conditions.
Most people appreciate being able to acquire and own their own home, rather than renting it. For us, the sustainable development of society means that this wish can be fulfilled. Homeownership is important for many, to achieve financial security and have faith in the future. Shelter is basic human need, and it is experienced better to live in an owned home than in a rented home. We are striving to be a contributor so that the key to your own home can be unlocked.
Nothing big can be achieved in solitude. We understand our role in the real estate ecosystem, and that it’s our obligation to drive the change we wish to see with like-minded, strong partners.
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Rent to own is a type of financing arrangement that gives the tenant the opportunity to buy the property they are renting, after a certain period.
In our case, our tenant pays an establishment fee, a market rent and gets a right to buy the property at a predetermined price. If the market price for the home in question has risen more than the predetermined price, our customer keeps the entire difference and uses it as equity when buying out the home in the future.
Since we are not a property developer, we are free to invest in any real estate to be able to offer rent to own agreements. This also includes homes on the secondary market that our customers can choose on finn.no that we buy, so that they can move in straight away and start saving for equity.
The alternative is new homes which usually have an occupancy date 2 to 3 years in the future, once the construction is finalised. You get a new real estate, but on the other hand you have to wait to both move in and put off getting a foot into the housing market for several years.
You choose the home, we finance it.
Following the purchase, we sign a three-year lease and give you a right to buy the property at a specific price. The cost of the right to purchase will be an establishment fee that is paid only once. You then pay a market rent during the lease period. You can buy us out during or at the end of the rental period. If the market price for the home in question has risen more than the predetermined price, you keep the entire difference and use it as equity when buying out the home in the future.
Additionally, part of the monthly rent can be used to build up equity in the property. In that case, this will be an optional extra payment on a monthly basis, which will be reserved for the home's equity. This is deposited into a savings account in the customer's name at our partner bank.
The lease usually lasts for three years, but based on your finances we can look at longer agreements. Our goal is that you take advantage of the right to buy and eventually become a home owner. However, you are not bound to use the right to buy and can choose to end the lease and move out.
In the application, one must typically provide the same information that a bank will ask for when assessing a mortgage application, including identification and your finances such as fixed income, free equity and any loans. We are looking for customers who have stable and orderly finances, who have the ability to pay the rent on time, and who will have the ability to buy the home at the end of the agreement. We will make arrangements for you to succeed in this.
The advantages of rent to own include that tenants can build up equity that can be used when purchasing the property in the future. It can also be a good solution for people who do not have enough money to buy a property right away, but who want to own their own home in the long term.
Since you as a customer get a fixed purchase price to deal with, you keep the entire increase in value beyond that price on the day you choose to exercise the purchase right. In addition, you can choose to pay a higher rent amount where the excess can be deposited into a savings account which is used for future equity.
While rent-to-own can be an attractive way to enter the housing market for some people, there are also some disadvantages that should be considered. When you sign a rent-to-own agreement, you are paying for a right to buy the home after the lease term is up
If you change your mind, you can lose the money you have paid for the option, which in our case is the establishment fee. We share the value in the home, which means you have the full upside potential after our mark-up, which you would not have if you bought the property straight away .
But, in any case, you get a foot into the market, which you would otherwise not have had the opportunity to do, if you do not have equity capital.
No. You only have a right, but not an obligation, to buy the property. If you use the right to buy the home, we have an obligation to sell it to you in accordance with the agreement between us.
Meeting time: 30 min.
Get a personal and free introduction to Address. Here you also get the opportunity to ask very specific questions regarding your house purchase
