Lease with the right to purchase in Ukraine: how will the mechanism work?

Lease with the right to purchase may become an alternative to a mortgage for Ukrainians without start-up capital. Find out how the mechanism will work, what conditions are necessary for its launch, and what risks should be taken into account

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Renting a home with the option to buy it later could be a real option for Ukrainians who don't have the cash to buy their own place. But this model only works if there are clear rules and a solid financial setup.

This was stated by real estate market observer Viktoria Berezhchak in a comment to Delo.ua, commenting on the mechanism provided for by the law “On the Basic Principles of Housing Policy.”

What is rent-to-own and how does it work?

According to the expert, rent-to-own has the potential to become an alternative to traditional mortgages.

“Lease-to-own has potential, but it is a complex mechanism that is very sensitive to its architectural design. Its main advantage is the opportunity for households without start-up capital to gradually transition to ownership without a traditional mortgage with high risks,” notes Victoria Berezhchak.

The model involves entering into a long-term lease agreement — approximately for 10–20 years. During this period, part of the monthly payments is credited toward the future purchase of the home.

Until full payment is made, the apartment or house remains under the operator's management. After all payments are completed, the property becomes the tenant's property. Thus, the tenant effectively combines payment for accommodation with gradual accumulation for the purchase of the property.

How rent-to-own differs from a mortgage

A traditional mortgage involves bank lending, an initial down payment, and risks associated with interest rates and financial instability. Rent-to-own allows you to:

● start the path to ownership without a large initial down payment;

● avoid the credit burden at the start;

● spread the financial burden over a longer period.

At the same time, the lessee remains dependent on the terms of the contract and the operator's financial model, which requires a high level of legal protection.

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What conditions are necessary for the successful implementation of the model

According to the expert, without a clearly structured system, lease-to-own risks remaining a declarative norm. Key conditions:

1. Transparent contracts. It is necessary to clearly spell out the terms, the price formation mechanism, the rules for crediting payments, and protection against sharp market fluctuations.

2. Financial infrastructure. This involves the creation of special funds, conducting audits, guarantees for the preservation of tenants' contributions, and the launch of pilot projects before scaling.

“Without this, rent-to-own risks remaining a nice idea on paper or being used only in isolated cases,” Berezhchak emphasizes.

Can rent-to-own become a key tool in housing policy?

Experts believe that, if implemented correctly, this mechanism could become one of the basic tools of housing policy.

It is particularly relevant in the context of war, internal migration, and unstable incomes, when a significant proportion of households are unable to accumulate the initial capital to purchase housing or obtain a mortgage.

At the same time, any long-term contracts related to housing require careful legal analysis. Before signing an agreement, it is worth checking:

● the mechanism for calculating and crediting payments;

● the terms of early termination;

● guarantees for the preservation of funds deposited;

● the rights of the parties in the event of a change in the value of the property.

On the Visit Ukraine platform, you can get advice from real estate lawyers who will help you analyze the contract, assess the risks, and protect the buyer's interests before signing the documents.

We remind you! The state is changing its approach to housing policy: the usual queues are becoming a thing of the past, and free apartments are no longer common practice. The new housing reform law introduces digital accounting, social rent, and clearly defines who can actually count on state-funded housing and who will receive alternative support mechanisms. Read on to find out who retains the right to free housing and what options are now available to other citizens.

Photo: shutterstock

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