Rent-to-Sell vs Traditional Leasing: The Numbers and the Trade-offs

Rent-to-Sell in short

The short version: your tenant is also your eventual buyer. They sign a lease of up to eight years, give you an additional 50% extra cash flow on top of your normal market rent, and hold an option to buy the place from you somewhere between year four and year eight. If you've gone looking for rent-to-own for landlords or vendor finance for investors, this is that idea done properly, on a written contract, with your own property manager looking after it.

You keep the title. You keep the mortgage. You keep the growth. What changes is the cashflow — up by half of the first year's rent, every week — and the exit, which stops being "whenever I get around to it" and becomes a window with a floor price under it. Your property manager keeps managing the property for the whole term, and their agency is the nominated sale agent when the home sells. PublicSquare acts for the homebuyer, and you pay PublicSquare nothing.

What changes when you switch from a traditional lease

Side by side, this is what actually changes — from the money that lands each week through to the day the property sells.

What happens at the end of the term

If the tenant buys, the sale price is the higher of the contracted minimum or an independent valuation, so a fall in the market does not by itself reduce your resale price, and the upside is not capped. The tenant's accumulated contributions are credited towards the purchase price as their deposit.

If the tenant simply doesn't buy, or the tenancy ends because they default, you keep the property and the contributions you've already received. If they can't get finance, they can ask for the home to be sold on the open market through your agency (from year 4, not in default, with three written declines from lenders or brokers). You then repay their contributions from the sale, less any shortfall below the contracted minimum and anything they still owe; anything above the minimum is yours. You can choose to keep the home instead: its independent valuation is treated as the sale price (so any shortfall below the minimum still comes off the tenant's contributions), and you pay the tenant's exit balance, without interest, within 30 days.

Either way, the property remains yours. Title stays in your name for the whole term and the property is sold from your name. Your mortgage is unaffected, and replacing one first mortgage with another is expressly contemplated in the Contract.

Market rent plus 50%: what it earns

The mechanism is simple. Rent-to-Sell gives you an additional 50% extra cash flow on top of your normal market rent, set at half of the first year's rent. Not sure what your property's market rent is? Start with our rental appraisal guide. That extra never moves for the whole term; the rent underneath it is reviewed each year and can rise by up to 4%. So a property collecting $700 a week today collects $1,050 under Rent-to-Sell — $18,200 more in the first year, and $145,600 more over eight, before you count a single rent increase.

Run the $700-a-week example out to eight years and a normal lease brings in $291,200; Rent-to-Sell brings in $436,800. We've held the rent flat on both sides on purpose, so the gap you're looking at is the contribution written into the contract — not a guess about where rents go. To run your own rent, use the weekly cashflow calculator.

A defined exit: the contracted minimum resale price

This is the part that usually gets landlords' attention. Every contract sets a minimum resale price, worked out by growing today's value at a floor rate over the completed years before the year the tenant buys. The earlier the tenant buys, the higher the rate they buy at. When the sale happens, you get the higher of that floor or an independent valuation. It's a term of the contract — not a forecast, and not a promise of profit — but it does mean the sale can't complete below it.

Here is how that plays out on the $800,000 property we use throughout this article — the same one behind the $700-a-week rent above and the sell-now comparison further down. Each figure is the contracted floor for that exit year; if an independent valuation on the day comes in higher, the higher number is the price.

To see the floor for any price and exit year, use the minimum resale price calculator. These rates apply to houses. Apartments and townhouses typically grow more slowly, so the Contract may set lower minimum growth rates for those properties, if both parties agree.

The tenant holds an option to buy between year four and year eight. An option, not an obligation — but for once the end of the hold has a shape you can plan around instead of a question mark. You can also sell during the term to a buyer who takes over the agreements, with the tenant's consent (which can't be unreasonably withheld).

What landlords also get

• Your tenant has completed PublicSquare's pre-approval and is working towards owning the place, not renting until something better comes along.
• Turnover drops to one tenant on a lease of up to eight years instead of a re-let at the end of every term.
• If the tenant breaches the Contract, you keep the contributions already received, and your agency can re-let the home as usual.
• Your property manager appraises and reviews the rent every year, lifting it by up to 4%.
• Your ownership structure is unchanged, and you can refinance throughout (the tenant's consent can't be unreasonably withheld), as long as you keep at least 20% equity.
• Your property manager stays on for the term, and their agency is the nominated sale agent, with commission on your usual arrangements. You pay PublicSquare nothing.

Rent-to-Sell case studies: real properties, real numbers

Everything above comes from properties we've published as case studies on publicsquare.com.au — Queensland homes across Townsville, Ipswich, Moreton Bay, Logan and Cairns. Rent and the weekly total are first-year figures; the contribution stays the same for the whole term.

TypeMarket rentContributionTotal weekly

• Townsville, QLD$975
• Ipswich, QLD$975
• Moreton Bay, QLD$1,020
• Townsville, QLD$1,125
• Logan, QLD$945
• Logan, QLD$1,020
• Cairns, QLD$1,110
• Logan, QLD$1,140
• Ipswich, QLD$1,125
• Ipswich, QLD$1,170
• Average$1,061

	Market	Type	Market rent	Contribution	Total weekly
	Townsville, QLD	Established	$650	$325	$975
	Ipswich, QLD	Established	$650	$325	$975
	Moreton Bay, QLD	New build	$680	$340	$1,020
	Townsville, QLD	Established	$750	$375	$1,125
	Logan, QLD	Established	$630	$315	$945
	Logan, QLD	Established	$680	$340	$1,020
	Cairns, QLD	Established	$740	$370	$1,110
	Logan, QLD	Established	$760	$380	$1,140
	Ipswich, QLD	New build	$750	$375	$1,125
	Ipswich, QLD	Established	$780	$390	$1,170
Average			$707	$354	$1,061

Rent-to-Sell versus selling now

A lot of landlords who talk to us are really asking a different question: should I just sell? Fair question. Selling today means taking today's price and walking away from the rent and the growth that come with holding. Holding under Rent-to-Sell keeps the money coming in while you keep your seat for whatever the property is worth at the end. Here's the same $800,000 property, let at $700 a week, with the sale landing in year seven — the year we expect most Rent-to-Sell tenants to buy. The three right-hand columns are that anticipated seven-year sale under different growth assumptions.

Selling today puts $800,000 in your hands and ends the story there. Holding under Rent-to-Sell means waiting until the anticipated year-seven sale, but banking about $7,480 a year after the costs above while you wait, and keeping the upside. "Average growth" is the 25-year long-term house average (CoreLogic); "high growth" is a better-than-average run. Both sit above the contracted floor, and a higher valuation on the day is the price you get. None of it is a forecast for your street — it's the shape of the decision.

Why Rent-to-Sell might not be right for you

Rent-to-Sell adds a lot of cashflow. It is not free of trade-offs, and you should know them before you sign anything. These are the four that matter.

1. The contributions reduce what is paid at settlement

The extra you receive each week isn't a bonus on top of the sale price. When the tenant buys, those contributions are credited towards their purchase, so they pay that much less at settlement. Think of it as receiving part of the sale price early, week by week. That's a real cashflow advantage — just don't mistake it for extra growth.

2. Rent increases are capped at 4%

The rent part is reviewed each year and can go up by as much as 4% — roughly what Australian rents do in a normal year, not what they did in the recent spike. If market rents run hotter than that, a standard re-let would earn more rent. The contribution doesn't rise either; it's set from the first year's rent and stays there.

3. You sell within the tenant's purchase window

The tenant can buy between year four and year eight, and year seven is where we expect most sales to land. That gives you a defined exit, but less freedom than a normal lease if you decide in year two that you want out. You can sell earlier only to a buyer who takes over the agreements, with the tenant's consent (which can't be unreasonably withheld); selling in breach means repaying the tenant's contributions plus $10,000.

4. The tenant may not complete the purchase

Every homebuyer completes pre-approval and works towards mortgage readiness, but nobody can promise what a lender will say years from now. If they simply don't buy, or the tenancy ends through their default, you keep the property and the contributions. If their finance falls through, they can try again after 6 months; or, from year 4 and not in default, with written declines from three lenders or brokers, they can ask for an open-market sale through your agency. Their contributions are then repaid from the sale less any shortfall below the contracted minimum (so you're protected down to the minimum, up to the value of their contributions), and anything above the minimum is yours. You can choose to keep the home instead: its independent valuation is treated as the sale price (so any shortfall below the minimum still comes off the tenant's contributions), and you pay the tenant's exit balance, without interest, within 30 days.

Written by

Dean Arnold

Founder & CEO

Licensed real estate agent

I started PublicSquare in 2021 to give homebuyers a real path to ownership without a deposit, and landlords a stronger-cashflow alternative to a standard rental. I hold real estate licences in Queensland and New South Wales and personally review every property that enters the program.

Reviewed by

Jarrod Wills

Buyer's Agent

Licensed agent · Former mortgage broker

Over 10 years’ experience as a mortgage broker and real estate agent, now a licensed buyer’s agent with PublicSquare since 2021. He has worked on 100+ property transactions and knows the Queensland and New South Wales markets and the Rent-to-Own model well.

Read more about Rent-to-Sell.

This article is general information only and does not take your personal circumstances into account. PublicSquare is a licensed real estate agency, not a financial adviser or credit provider. Consider seeking independent advice before making a decision.