Buying a house by renting it

Buying a house by renting it

“Imagine being able to save through the rent you pay, so that at some point in the future you can buy the property you live in. At the same time, as landlords, consider the possibility of collecting a higher rent and at the end of the agreement with your tenant, selling it to them, possibly at a higher price than when the tenancy started.” With these words, Economics Professor Kostas Zachariadis summarizes to Kathimerini the model that his London-based company Adjoin Homes has been implementing since last year.

“In 2020, despite having a steady income and a good job as a university professor, I found myself unable to buy my own property after 12 years as a tenant in London. The sums we had spent on rent had no yield. This is how the idea was born for the creation, in 2022, of Adjoin Homes,” says Zachariadis.

The company is already preparing for its launch in Greece as well, starting from January 2024. But how exactly does the model proposed by the company work?

First, tenants and landlords agree on a certain duration and a certain amount of rent, e.g. 1,000-1,200 euros a month for three years. However, the rent is higher than a similar property in the same area. With the higher rent the owners secure, they have the first incentive to use this service.

In return, tenants will be able to use this extra amount to buy the property, at the end of the three years, at a price lower than the one that will then prevail in the market.

If, for example, the property at the beginning of the agreement costs €250,000 and after the three years the amount has increased to €300,000, the tenant will be able to buy it instead for €275,000. He will effectively use the extra money he has given through the rent.

Also, the two sides agree at the beginning of the agreement to a minimum purchase amount for the property, e.g. in the event that selling prices decline in the interim, until the agreement expires.

“We believe that we can bring Adjoin’s model to the Greek market, as the benefits, both for tenants and owners, are multiple. Tenants, on the other hand, use part of the money they spend on rent towards a future purchase, they know the area and the property better and are able to acquire the property at a price lower than that which will prevail in a few years from today” notes Zachariadis. 

Accordingly, owners secure from day one a higher rental income, as well as a potential buyer of their property. This element is particularly important, as this way wear and tear is avoided, which is quite common and increases the operating costs for the owners.

The model is particularly attractive e.g. for people who have bought or rent another property and want an increased yield from the freehold property they are not using. At the same time, they also ensure a potential buyer in the long term, without losing any capital gains in the future, from a possible rise in prices.

Therefore if today, for instance, there is insufficient demand in the market, or prices are not satisfactory, the owner can take advantage of this model, in order to postpone the sale to a later time, ensuring a higher rent immediately. Accordingly, tenants can start saving funds toward the purchase of the property they live in.

Adjoin uses artificial intelligence technologies and analytical data to select properties suitable for implementing this model. As a rule, properties and areas where prices are expected to increase in the future are selected, as the correct estimation of the future value is crucial.

To date, the experience in England has shown high demand from interested tenants, mainly young couples in high-level jobs. Without this solution, they would need at least 10 years of savings, paying sums in rent, which they will not be able to use for any other purpose.

“If I had this solution from 2009, when I started renting an apartment in London, today I would have saved 100,000 pounds that I could use to buy it,” Zachariadis says.

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