{"id":19893,"date":"2017-12-26T01:00:40","date_gmt":"2017-12-25T14:00:40","guid":{"rendered":"https:\/\/www.realestatetalk.com.au\/?p=19893"},"modified":"2017-12-26T01:00:40","modified_gmt":"2017-12-25T14:00:40","slug":"all-that-glitters-is-not-gold-peter-carter","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/all-that-glitters-is-not-gold-peter-carter\/","title":{"rendered":"All that glitters is not gold \u2013 Peter Carter"},"content":{"rendered":"<p>Solicitor <strong>Peter Carter<\/strong> answers our questions about the \u2018rent to buy\u2019 schemes that are catching many would be Aussie investors.\u00a0 We continue to be concerned and Peter says that more investors are not heeding the warnings.<br \/>\n<strong>Transcript:<\/strong><br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>I don\u2019t know if you\u2019ve seen it in your area, but I\u2019ve certainly seen it in mine. Driving around, you\u2019ll see signs on lampposts and street signs that say, \u201cWe will buy your house for cash. We\u2019ll pay the full price, and we\u2019ll buy it now.\u201d What\u2019s behind those? It\u2019s a rent-to-buy scheme, and I want to talk about it because it has been of concern to me for some time.<br \/>\nPeter Carter is from Carter Capner Law, and he joins me. Peter, I know you know what I\u2019m talking about. Could you just explain how these schemes work?<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>It depends on the imagination of the entrepreneur behind it, but typically it\u2019s a situation where the perhaps desperate, or hopeful, or optimistic seller thinks they\u2019re going to get a bargain out of this type of deal. On the face of it, they do.<br \/>\nThe entrepreneur offers to pay full price, but it\u2019s a projected long-term settlement. Usually they\u2019ll pay an option fee of cash or sometimes it\u2019s even monthly fee. But they get the right of immediate occupation. The entrepreneur \u2013 or agent; let\u2019s call them that \u2013 gets the right of immediate occupation, and they install their customer as buyer under those terms.<br \/>\nThe option fee is paid out of the rent received by the agent\u2019s customer to the seller and comes off the ultimate purchase price. But if you have a three- or five-year term involved there, it can become a nightmare for the owner-seller. They might never get paid, and that\u2019s often what happens.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Is the figure that\u2019s paid today\u2019s figure, or is it the figure projected toward the settlement time \u2013 which could be two or three years away)?<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>It\u2019s today\u2019s figure, but it\u2019s the asking price. There\u2019s usually no argument about what the asking price is, because the object of the entrepreneur is to get hold of the house so they can put a tenant in.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>The real risk here, of course, for the seller is that you\u2019re giving up occupation. There have been a number of occasions, I believe, where the property either wasn\u2019t settled or when it was due to be settled, it was trashed.<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>Yes, that\u2019s right. The attraction to the buyer is that they get a long time to settle. They\u2019re actually only paying rent, and part of that is going to the buy price, which to many punters looks attractive. But of course, the entrepreneur is taking a cut as it goes through.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Then of course, the risk is that the property won\u2019t settle. What sort of recourse do you have in this situation? What are the contracts like, Peter?<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>They\u2019re innovative, customized contracts, and they have all sorts of weird and wonderful conditions. The ultimate outcome is that neither the buyer nor the seller is satisfied \u2013 legal action is required, or sometimes Fair Trading intervenes.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>What would be your advice to someone who brought you one of these contracts?<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>Certainly have a good look at it. Look at all the fine print. Sellers beware, and buyers especially beware. I\u2019ve never seen one come out well.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>What happens to the poor tenant in the middle of all this? They\u2019re going into the property, and they assume that they\u2019re paying rent, which is being split between two parties.<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>Well, remember, the tenant is the buyer. That\u2019s how the entrepreneur makes it all work. They get a buyer in \u2013 a very optimistic buyer \u2013 who that thinks instead of paying rent they\u2019ll own this house one day. But it really is one day. I\u2019ve seen contracts where it would just be impossible to actually finally pay the ultimate purchase price. It just doesn\u2019t add up.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Yes. You\u2019re preying on the dreams there of someone who wants to get into a house, and maybe they can\u2019t do it in the traditional way by getting a loan, so this is the only way for them to do it. Pretty risky all round.<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>Pretty risky. The typical advertisement you see is not just signs on lampposts; you\u2019ll see advertisements in newspapers, etc. A good example i, \u201cWe want ugly, smelly houses, debt-ridden houses. Any price, any condition. If you don\u2019t want it, we do. We can buy your house fast. Agents can\u2019t.\u201d That\u2019s the sort of message they\u2019re putting out to desperate sellers.<br \/>\nTo buyers, the advertisement typically runs \u201cOwn my home! Must sell! Stuff the banks! Move in today!\u201d \u2013 that sort of thing.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>The alarm bells should be ringing when you read that sort of stuff.<br \/>\nPeter Carter has been my guest from Carter Capner Law. Peter, thank you so much for bringing this to our attention, and thanks for your time.<br \/>\n<strong>Peter:\u00a0\u00a0<\/strong>Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Solicitor Peter Carter answers our questions about the \u2018rent to buy\u2019 schemes that are catching many would be Aussie investors.\u00a0 We continue to be concerned and Peter says that more investors are not heeding the warnings. Transcript: Kevin:\u00a0\u00a0I don\u2019t know if you\u2019ve seen it in&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":19894,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,10,11,13,36,25,27],"tags":[101],"class_list":["post-19893","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>All that glitters is not gold \u2013 Peter Carter - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/all-that-glitters-is-not-gold-peter-carter\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All that glitters is not gold \u2013 Peter Carter - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Solicitor Peter Carter answers our questions about the \u2018rent to buy\u2019 schemes that are catching many would be Aussie investors.\u00a0 We continue to be concerned and Peter says that more investors are not heeding the warnings. 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