Courts crack down on ‘rent-to-buy’ housing scams- Well not really but the “spin” is good

PROMOTERS of ‘rent-to-buy’’ housing schemes must operate under the right licences or face prosecution after a landmark court ruling today.

Supreme Court Master Craig Sanderson ruled today that to offer a rent-to-buy scheme – like that of Perth’s Easyhomes WA – a company must have a real estate agent licence.

Mr Sanderson also found the parent company of Perth’s Easyhomes, No Loan Home had engaged in misleading and deceptive conduct.

The Sunday Times first unveiled the scam by Perth’s Easyhomes director Nik Butkovic in January 2009, when property owners revealed they had people living in their properties, but not paying any rent who faced losing their houses.

Under the scheme buyers would pay an upfront option fee of about $15,000 as well as an ongoing option fee. Part of that would be credited towards the final purchase of the property.

The buyer would then sign a tenancy agreement with rent payable until the end of the agreement, normally four years, when the option to buy the property is exercised.

Consumer Protection Acting Commissioner Gary Newcombe said the landmark case, which was launched back in August last year, gave legal clarity over the issue.

He said the case would have implications for all promoters of rent-to-buy schemes as the commission would now be looking for similar schemes.

“The Supreme Court supported Consumer Protection’s belief that the promoters of these schemes were engaging in real estate transactions so were required to be licensed and were therefore operating outside the law,” Mr Newcombe said.

“Our major concern was that the consumers who took part in these schemes didn’t have the protection that the licensing system and laws offer,” he said.



•             Richard of Perth Posted at 11:00 PM August 27, 2012

Well if anybody actually bothered to read the courts comments (they didn’t make a ruling) you would see that it was the way Easyhomes were dealing with the properties they held ie. acting like Real Estate agents and they did not have a RE license so that’s a no no. The courts expressly did not say there was anything illegal or wrong with rent to buy as a strategy – how could they the WA State Government uses rent to own strategies!! Wake up people if you want to blindly follow what our media report you deserve to be hood winked by them. As a matter of FACT a rent to own strategy uses 1. a residential tenancy agreement 2. a contract for sale – which is linked by an option document. Which part is illegal? – the residential tenancy agreement or the contract for sale – both these documents are used by RE agents everyday!!

•             lee Posted at 3:37 PM September 22, 2012

I agree with you Julie. As is sometimes the case – the real forces behind new laws are often hidden or unclear. I would guess that the mainstream real estate authorities and Agents selling Property would not like the rental/buy approach. Another form of competition for them. It reminds me of when interest earned on Rental Bonds held in safe keeping would eventually be paid back to the Renters. Now the law has changed again, (who knows when and why/how) and the interest on the renters bond money is not paid to the renters at the end of their lease. That seems to me like legalized theft.

•             Maz of Perth WAPosted at 3:22 PM September 28, 2012

Thanks Richard of Perth for telling the truth about rent to buy. I agree with you. This scheme has been around for hundreds of years. People dont bother to learn what its all about. You would be very lucky to join one of these schemes, someone is giving you the oportunity to own your own home with very little deposit. Everyone knows its difficult to save for a deposit. A Residential Tenancy Agreement is the document everyone signs when they rent a house. A Contract of Sale is what everyone signs when they buy a house. These docs are used every day. An Option is a document which can be drawn up by a Solicitor and is a legal document.These three documents are used in a Rent to Buy transaction. The Banks dont want people to start transacting in this way as they’ll lose out on millions of dollars in interest payments. Real Estate Agents dont want you to start transacting in this way as they will lose out on their commission and/or rent. REIWA doesnt want people to transact in this way as they are a club for Real Estate Agents. Hence all the bad press. They are trying to keep the lid on it. Wake Up Perth! It can all be done legally without making Banks and Real Estate Agents rich!!!

Comments From the VFA President:

I think Richard, Lee and Maz have summed this up nicely sums it up nicely for us here. Thanks guys.

Plus no representative from Easyhomes turned up. Its safe to assume that if one party fails to show up the other side will have a very easy time of winning their case, which happened here.

The Department have taken great liberties with the truth in the press releases about this case, insinuating a great deal of things that are not true.

Lease Options are legal in WA, point blank. It was more the way that Easyhomes structured the transaction and transfer of the money that brought them under the Real Estate Agents Act.

This was not the first person that DOCEP approached. One other Rent to Buy operator was approached that I know of and the way he transacted his properties was acceptable to the department.


Dave Siacci

VFA President


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