Why lease purchase?

Lease purchase is a legal term for a contract, it binds both seller and buyer to the sale. The contract exists between a house owner and a tenant where the tenant agrees to pay the owner an increased monthly rental that is credited to an account for use as a down payment which gives the tenant the right to buy the house at the end of the lease period for a price established in advance. It is common for the purchase price to be about 10% above the market value. The lease is usually made for 3 to 5 years.

The major reason why the buyers are engaged in a lease purchase would be the buyers are not in an immediate position to own the house, but they have a strong intention to buy and would like to establish a right to buy at some future date. A lease purchase is therefore a perfect tool for the buyers to have exclusive right to buy the house rather than move again under the terms and price to which both parties have previously agreed after they have resolve their credit issues, paying off debts or qualify for financing. The lease purchase also appears to be favourable to the buyers when the housing prices could rise quite rapidly over the next few years. This will be a pretty good deal for them when they are locked into a contract for up to 5 years where the price has been established.