Pathways Property
New Zealand house prices have skyrocketed over the last decade, making it harder and harder for many people to get into the property market.
Pathways Property, part of the 4 A Better City Trust, in conjunction with a number of investors, are creating affordable opportunities for families throughout the Hutt Valley who wouldn’t normally be able to purchase their own home.
What is Rent To Own
The reality is that many New Zealanders aren’t able to achieve homeownership due to bad credit, no credit history, a struggle to save the needed deposit, or lending restrictions implemented by the banks. A way around this is with a Rent to Own Agreement.
Rent to own is an agreement between an Investor, Pathways Property (the Manager) and the prospective homeowner. It gives prospective home owners the right to live in the property as a tenant and then the opportunity to purchase the home they're living in at a later date - usually five to seven years, at the purchase price that was fixed at the beginning of the agreement.
These agreements are made to benefit the tenant by providing stable, affordable housing during the "saving" period. They are also set up so that if the property increases in value during this period the increase in value is added to the deposit the tenants have saved further increasing their are financially benefited. Pathways Property will then provide expert support to the tenant as they go through the purchase process.
How the program works
Once approved the prospective homeowner moves into the property and lives there as a tenant for the rent-to-own period (usually 5 -7 years).
They sign an "Agreement to Occupy" and pay a bond. This agreement provides the same rights as a standard Residential Tenancy Agreement, with one key difference: at the end of the agreed period, the tenant has the option to purchase the home—provided their savings commitment has been met.
Throughout the rental period, the tenant makes weekly payments to Pathways Property. Part of this payment covers the property’s ongoing costs, including rates, insurance, general maintenance, management, and mortgage repayments. The remaining portion is held by Pathways Property and contributes toward the tenant’s deposit when they choose to purchase the home at a time negotiated with them.
What is Shared Equity
A shared equity home purchase is a ownership model where the purchaser can buy a property in partnership with another party, usually a nonprofit organisation, or a private developer.
Instead of buying 100% of the home upfront, the purchasers pay for a portion of the purchase price, (for example, 70%) with the help of a typical bank mortgage and the partner organisation purchases the remaining share.
How the program works
The purchaser lives in the home as if they were the full owner and is responsible for all rates, insurance, maintenance, property management, and their mortgage repayments.
At any time, the purchaser can either buy out the investor or sell the property. If they choose to buy out the investor, the home is valued by a Registered Valuer, and the investor is paid the same percentage of the current value that they contributed to the original purchase (e.g., 30%).
If the purchaser decides to sell the property, the investor receives the same percentage of the sale price as they originally contributed.
How to qualify
To achieve this they have eligibility requirements that limit the amount of income and debt you can have.
Be a New Zealand citizen or permanent resident
Have at least one person in the household in full time employment.
Have manageable debt that can be paid off in five years.
Have an income below a certain threshold, between $70,000 and $120,000 per year before tax.
Frequently asked questions
Do I get a share of my house’s value growth?
The property’s capital gains after the first five years go towards the Tenants deposit. That means, if you entered a rent to own agreement on a property initially valued at $500,000 and it increased in value by 5% each year you’d get over $125,000 towards the deposit.
Does my rent go towards the deposit or fees?
A portion of the weekly rent payments go towards the tenants deposit savings programme at the end of the five year period. The other portion goes towards the costs of ownership such as rates, insurance and management fees.
What happens if property prices go down?
The rent to own period can be extended if necessary.
What if I have a low credit rating?
During the rent to own period it is essential that no further debt is incurred. This will mean that by the time the purchase takes place the credit history should be suitably strong enough to achieve a mortgage.
What happens if maintenance is required on the house?
General maintenance will be handled by Pathways Property and the costs covered out of the collected “costs” portion of the weekly rental. Upgrades, damages or larger/non-essential items will be managed on a case by case with the Tenant.
What if I want to leave and not buy the home?
If your circumstances change and you need to end the rent to own agreement this is possible. Your Bond, if needed, any saved deposit will be used to ensure that all rents are covered and any damages remedied. Any remaining bond and deposit will be paid back to you.
Can rents be increased during the 5 year term?
Yes, the weekly rental figure will be reviewed every 12 months and small increases may be required to cover the increases in insurance and rates etc during the rental period with 60 days notice. Pathways Property, and the Maori Trust we are working with, are committed to keeping rent rises to a minimum level.
Interested in Rent-To-Own?
Please fill in the form below with your details and will be in contact shortly.
Support Us
4 A Better City is a not-for-profit organisation with charitable status. We are seeking partnerships with corporate sponsors and philanthropic donors
To learn more on how you can support us, please get in touch.
Social Enterprises
Information
Contact us
About Us
Shop FAQS
Privacy Policy
Keep In Touch
Suite 105, 22 Lane St, Upper Hutt 5018
04 527 4001
office@4abettercity.nz