Why are we Crowd Funding Rent and Buy Loans?

Have you ever wondered why housing is less affordable for today's young people than it was for previous generations? 

Have you wondered why house prices fluctuate?

Have you wondered why bank interest on savings is low?

Have you wondered why mortgages seem expensive?

Have you wondered why the global financial crisis was triggered by home loans?

The reason is the way we create and repay debt. Rent and Buy Loans creates zero cost Money that has a value. Existing Loans creates Money that has a value in itself.  This value in regular loans is Interest on Interest.

• With a regular loan from the Bank you pay off the interest as it happens and anything left over comes off the loan. This makes the interest on your loan compound.
• With Rent and Buy Loans you enter into a rental contract where you agree to pay a certain rent for a given period.

• With a regular loan the bank has a mortgage on your property.
• With Rent and Buy Loans Savers have a mortgage on your property.

• If you are a Saver with a regular deposit account your savings value reduces with inflation.
• With Rent and Buy Loans your savings increase with CPI inflation.

An example of existing loans and savings

For a 6% loan over 25 years compound interest costs 25% of the loan. That is $25,000 on a $100,000 loan

Over 25 years an inflation rate of 2% reduces your savings by 39%. That is $39,000 on $100,000 savings.

If you put your Savings into Rent and Buy Loans and you use a different Rent and Buy Loan Contract to pay off the amount of the loan you will get an extra $39,000 in savings from inflation adjustments and it will cost you $25,000 less to pay off your own home because there is no compounding interest.

How can a Saver know that they will get their money back?

The operators of Rent and Buy Loans specify the conditions for Savers. Different operators will set their conditions.  In the example we have specified the return as the same as a 7% fixed interest annuity.  The Saver specifies when they want their annuity to start.  This determines the Renters needed to put in funds.  The operators make sure that there are enough Renters willing to Rent and Buy to meet the Savers needs.

Renters fix the length of time they wish to Rent and Buy.  That determines the amount they pay each day their Rent is due.  The operator now makes sure the Renters repayments are at least equal to the Savers needs.

Savers can specify the person to uses their Savings for Rent and Buy.

How Governments make housing affordable for all

Governments can use the scheme to solve the affordability problem for low income households. Governments can be Savers. They put funds into Rent and Buy Loans. They say they do not want their Savings back for one hundred years. They specify that the funds are only used for low income people.  The Rent and Buy operator can now offer funds to low income Renters who only have to repay Capital. The Renters can have conditions to reduce the time they are able to use the Loan.  When they meet those conditions they change to another Loan.

This technique means governments can overnight remove the need for special government housing.  They can put all their existing government housing onto the regular market. They can stabilise house prices by putting in enough Savings for low income households.

Governments can ensure that a proportion of all housing in all parts of a city has some low income households.  This can happen without any new systems or legislation or cost.  The system will remove the cost of providing special Government Housing.

Your situation

If you are a Saver click here to see an example of a Saving returns..

If you are an existing Home Buyer click here to see an example of how you could benefit

You can put your situation as a comment after you buy a Reward and we will tell you how you can benefit from a Rent and Buy Loan.

The Rent and Buy Loans Project aims to change the way we think about Loans.

If you buy a Reward you become a Rent and Buy Loans member.  You become part of the movement to make owning a home affordable for all.

Rewards will be used to:

• Provide Members with information on progress on Rent and Buy Loans adoption and a way to make Members voices heard.
• Pay Members to organise petitions for member organisations and governments to offer Rent and Buy Loans.
• Pay Members to write submissions on homelessness and affordable housing to present to enquiries and governments.
• Rewards to pay Members to give workshops to lending organisations on how they can introduce Rent and Buy into their Lending portfolio.

The message of Rent and Buy Loans is that everyone can afford their own home, we can moderate financial speculation in home values and we can give high returns on Savings.  This happens because we have made each rental contract independent of any other contract.

The challenge for Rent and Buy Loans is to change the mind set of Lenders. They have been issuing regular loans for so long they think there can be no other way.  Their systems are designed for regular loans and not for Rent and Buy Loans.  They have to be convinced that it is possible to build Rent and Buy Loans systems. They have to understand that it is another form of Loan and it is not taking away their business.

However, the main challenge is resistance from those who profit from the inefficiencies in the existing system. 

It is not the Banks or the Lending Institutions. 

Resistance comes from:

• Those within institutions whose expertise in trading money will be in less demand.  
• Those who are able to move money to avoid paying tax. 
• Economic and financial advisors because much of their expertise is tied up in ways to manipulate the existing system with tax minisation schemes like negative gearing.  
• From lawyers and accountants who make money because of the complexities of the existing system.

Governments concerned with housing affordability and homelessness should support Rent and Buy. Using Rent and Buy Loans means assets remain in the country for the benefit of its citizens. Assets are not moved in the form of money to other countries as happens with regular loans.

There is little technical, regulatory, or legal risk. The form of the legal contracts is well known. Rent and Buy Loans can use existing systems now used for the administration of regular loans. Technologies exist to automate Rent and Buy loan administration for a large numbers of loans. 

There is no excuse for any person in any country not to own their own home. 

Purchase a Reward and join the movement to get Lenders to offer Rent and Buy Loans