THE MIRAGE OF RENT-TO-OWN

When the real estate market turns sluggish, a familiar idea resurfaces — the rent-to-own (RTO) scheme. On paper, it sounds like a win-win: “Why rent when you can own?” But behind the marketing pitch lies one of the most misunderstood setups in property transactions.

Most people think of RTOs as a simple bridge between renting and buying. In truth, they’re two contracts stitched together — a lease and an option (or obligation) to buy. The first gives you the right to occupy the property. The second gives you the hope (or sometimes, burden) of ownership later on.

Here’s where it gets tricky: while you’re paying “rent,” part of that payment supposedly goes toward the future purchase price. Sounds great — except the math often tells another story.

Developers or owners offering RTOs usually act as both landlord and lender, which means the “rent” you pay already includes a built-in interest rate — often higher than what banks charge. In other words, you’re not just renting; you’re financing a loan at a premium, hidden under a friendlier name.

Take one online example:

Property price: P5.4M

Downpayment: P270K (12 months to pay)

Monthly: P54.9K for 25 years

Market rent in the area: P35K

Add: dues, insurance, taxes ≈ P5K

That’s P35K just to rent, but P54.9K under RTO — about 56% higher. If the same buyer qualified for a bank loan, the amortization would drop to roughly P44.5K per month.

That difference isn’t magic — it’s the cost of convenience. You’re paying extra for skipping the bank process and accepting risk the developer would rather not bear.

So, before signing a rent-to-own deal, ask:

Are you truly buying a home, or just renting an illusion of ownership at a higher price?

From the seller’s perspective, the logic is simple: the proper way to price the buyer’s monthly amortization is to account for both the value of the property and the cost of money — essentially, the interest or lending rate.