While we’re sorting through the dissolution of the American Dream, we can take a few pointers from England, where homes for rent to own is saving the day for their own mortgaging crisis. Peruse the British papers and you’ll find dozens of articles on homes for rent to own.

The successful sales team at Dunelm Homes says THE secret of their success in a slow market is their offer to let owners “try before they buy.” They offer prospective tenants a 3.99% fixed-rate mortgage and allow people to move into the homes for rent to own.

“We’ve created a rich variety of homes in sought-after locations,” explains marketing director Colin Willetts. “But while we know they are desirable, it’s important to make sure people are able to make these homes a reality. By responding to the beckoning credit crunch with some great deals, we really believe we can give buyers a greater chance of living the life they aspire to.”

If the tenants of homes for rent to own buy at the end of the two-year lease, Dunelm Home will give them a rent refund, allowing them to save money that can be used for other things – like furniture and decorations. If the tenants decide to pass on the deal at the end of the term, they can simply walk away. The homes for rent to own even cover luxury homes with high-quality craftsmanship and coveted locations.

“It’s good that the Government is thinking creatively about addressing our affordable homes shortage, supporting current homeowners and assisting housebuilders in the current challenging environment,” says David Orr of the National Housing Federation. “Try before you buy schemes make a lot of sense.”

“Despite the current nationwide housing crisis, Atlanta home sellers are commanding top dollar when selling their homes,” reports Vincent Polisi, President and Co-Founder of Finance the Dream, a creative financing solutions company. He adds that by selling their properties as lease purchase homes, “sellers can sell their properties quickly, for top dollar and without costing them a dime in commissions or fees.”

In Atlanta, there is a program by which finance companies can report the tenant’s payments to the national credit bureaus to speed up the credit restoration process and enable renters of lease purchase homes to qualify for mortgages. Renters are automatically entered into a credit restoration program monitored by a local loan officer and set up direct deposit payments.

Lease purchase homes in Atlanta are ideal for sellers who’ve had their homes on the market and aren’t sure if they want to go through a realtor or not. Rather than try to manage the deal on their own, individual sellers can go through a finance / management company, which will draw up the legal documents, run the credit program, ensure that the monthly payments are coming in and that the house is taken care of by the tenants.

Toms River officials are looking at creative problem solving to help homeowners hang onto their properties and prevent foreclosure, while enjoying affordable monthly payments. The latest proposal from Tom River officials is to sell the land to the Toms River Workforce Housing Community Land Trust, and the homeowners would then lease the land and remain in their lease purchase homes.

“Basically income-qualified families that live in properties — that also would have to qualify – would be able to participate in the program,” explains affordable housing attorney John F. Russo Jr. He adds that homeowner mortgages could be reduced by funds donated by builders, rather than by taxpayers.

Until the lease purchase homes are paid off, a deed restriction would be placed against the property – and when the home is sold in the future, the restriction would require another income-qualified family to move in. Legal service official Connie Pascale says this proposal is a good thing because it preserves much-needed affordable housing for the long run. Additionally, it prevents the city from having to buy all the houses and resell at a time when buyer confidence is shattered.

The Tom River Foreclosure Prevention Program was presented at Town Hall this month to gather input from residents, the city council and the mayor. Russo hopes Superior Court Judge Vincent J. Grasso will approve the lease purchase homes program so they can implement it sooner rather than later.

The houses for rent market is opening up in San Francisco Bay – offered up by frustrated homeowners who can’t sell and usurped by would-be homeowners who are waiting for the volatile market to turn.

Ed Basaldua from Parkone Properties says that houses for rent are a good short-term compromise until the market improves. “You’re going to have monthly payments between $9,000 and $12,000 a month. Right now you can rent that same home for between $5,000 and $6,000 a month,” he said.

Home ownership isn’t what it used to be, some analysts say. If your house isn’t appreciating, what’s the point in owning it? “A lot of the renters I’m getting for these homes are would-be buyers, but when they look at the difference between rent and mortgage – they see little chance of gaining any equity through appreciating over the next couple of years, so they’re opting to go the rental route,” Basaldua explained.

Thirty-year real estate veteran Chris Mohammed said she’s offered up her 4,000 square foot home in Livermore as one of the lease purchase homes, since it’s been on the market since September. “I’ve offered this for a lease option or for rent, so if somebody wants to lease option it to purchase within a year, that’s fine too. I am going to try to use all avenues within real estate; things that were old are new again.”

Some houses for rent in the San Francisco Bay area are simply on a year-to-year contract, with either party able to opt out any year. Other houses for rent are offered as lease purchase homes – meaning that after a few years, the renters will have to either buy the home or move on, sending the house back to market.

“The single-family rentals are impacting our ability to rent apartments because they are directly competitive,” luxury apartment VP Mike Clow complained.

As a result of increased competition from houses for rent in Phoenix, the median rent dropped 9.3% to $939 in the first quarter of 2008 – the steepest drop in the twelve largest US metros. Even so, renters can snag a brand new lease purchase home for the price of a 990-square-foot apartment – and there are 9,000 houses for rent to choose from in the Phoenix metro!

Owners are looking to offer houses for rent as an alternative to foreclosing, which explains why there are so many on the market right now. Condo conversions are also all over the market right now, which means there’s a diverse swatch of rent to own real estate.

“Definitely homes are out there and they are a competitor of ours,” said Kim Atkinson, director of marketing for Mark-Taylor condominiums. “But we offer a lifestyle . . . we’ll take care of the grass, we’ll keep the pool clean. We’re really strong in being able to position those benefits to people.”

Bank-owned homes are being offered at the lowest value and are being snatched up by market savvy investors with means. However, for homeowners who need out immediately, they’d have to sell their homes at 2007 prices. For these people, Coldwell Banker realtor Michael Rose says it makes sense to offer their houses for rent to give the market time to settle and not depreciate the value of the home in the meantime.

To buy more time to qualify for a new mortgage following foreclosure, MainStreet.com recommends considering lease purchase homes with the option to buy down the road. This option is good for people who have the money in the bank to cover monthly payments but need another five years or so to be considered for another mortgage.

“This is a very humbling thing, when people are foreclosed on,” financial adviser Ilyce R. Glick says of the 5.5 million Americans whose homes went into foreclosure this year.  “You failed at something very major…It’s going to require a healing process.”

That healing process may not only require the consideration of lease purchase homes, but will also require some financial repair. Lines of credit for new cars, private loans and new homes will be off-limits for the next five years, Glick tells the foreclosed upon. In the meantime, pull your credit report from AnnualCreditReport.com to see what you’re dealing with. You’ll need a credit score of 740 or better and money in the bank to cover a 20% down payment.

You can buy a reliable copy of your credit score from FICO.com, which will allow you to responsibly pay any outstanding bills, reduce credit utilization rate to 30% or less and replenish your 401k savings plan. Downsize your life, selling off any major purchases you really don’t need. Visit the Consumer Credit Counseling Service (CCCSINC.com) to find out who is offering free financial classes in your area.

Some buyers like lease purchase homes contracts because it encourages them to save and repair their credit in a timely fashion (usually 3-5 years). Many sellers will even set buyers up with a (free) mandatory credit counseling service.

“House swapping” is a new real estate trend where owner/sellers who wish to move enter their homes into a database for trade. The system will then match them up, much like how a dating website works.

“The current market is holding many families back,” explains Mike Kalis from Marketplace Homes in Beverly Hills. “They can’t get into a new home until they get rid of their old home first.”

Marketplace Homes dabbled in the lease purchase homes business for many years to help a niche section of the market. There were many people who couldn’t move into a new home because they were unable to save up a down-payment while paying an existing mortgage or apartment rent. By saying goodbye to the apartment, they were then able to save money within a year or two, while living in their new lease purchase homes.

If individual sellers are having a tough time getting rid of their homes, they can offer their properties as lease purchase homes, although the risk is that the renter may be unable to take on the mortgage after the agreed upon time frame, thus leaving the seller at square one. Now builders and sellers alike are looking at offering lists of comparable homes for a fair trade where both sellers are happy. This concept has appeared on CNN and “Good Morning America” as a creative solution to the housing slump.

“Today’s real estate market isn’t giving them the price they need for their home, yet they know it’s a great time to buy,” Kalis said. “We’re helping people move into their dream homes now rather than later.”

“We want folks to be able to hold on to the American dream,” says Daniel Rosemond, director of community development at Miami Gardens. “But at the same time, in a low-wage region like South Florida, we have to be realistic about people who, frankly, aren’t ready to be homeowners yet.”

Rosemond hopes that a rent to own property program will be erected to help the average American who got swindled into the mortgage meltdown and suffered minor credit damage as a result. He feels rent to own property programs meet the needs of many people who are stuck in the middle with foreclosed homes, little employment history, small savings or no credit history.

The South Florida real estate market had been hit pretty hard. In addition to the foreclosures happening around the country, a wave of hurricanes in 2005 and a number of loan sharks offering adjustable rate mortgages sprang up. Now repossessed homes are becoming crime dens, left to sit idly by the city while officials wait for the government to step in and provide some relief.

Rosemond understands that homeowners don’t like living next to renters, although a rent to own property is a step above offering houses for rent because it encourages eventual ownership and generally attracts a more responsible crowd. “We need people to rent longer before they buy houses,” he explains, “but we also need to motivate renters to feel like they have a stake in those properties. This would motivate them and create the kind of homeownership you want for a community, not the houses built on sand.”

In Eastern Idaho, houses for rent are looking more attractive than ever. Prospective first-time buyers are afraid to enter a slow-changing market and may have trouble building up their down payment right away amid rising fuel and food costs. Moreover, victims of foreclosure suffer bruised credit and increased uncertainty. This has opened up the rent to own real estate market in Idaho, which seeks to help the cash poor who need homes and the people with expensive high-end homes who want to rent because they can’t sell their homes yet.

“I tried to sell a house one day and the guy offered me five thousand down and six month’s rent, and so I was like okay,” Burke Bennett says, explaining how he became a rent to own real estate landlord.

Bennett says his rent to own real estate garners ten times the response of his “for sale” homes. “The sub-prime market is gone,” he explains. “People who I was getting financing for 12 months ago can’t get financing anymore.”

For Bennett’s homes, he adds an additional 3% onto the sale price of the rent to own real estate for every six months the owner occupies it, which is an added incentive for them to take the deal seriously and move past the rental phase. After all, there’s some risk for the seller, who could wind up back at square one if the renters can’t improve their credit and take on the mortgage eventually. However, Bennett says it’s been a win-win situation for him. “Basically I use my good credit score to get them a lower interest rate, and it works out great for both of us,” he says.

Financial planners recommend that buyers interested in rent to own real estate look at the overall price of the house, rather than just the monthly payments, when assessing the financing option. They also need to be sure their credit can be repaired in the specified time or they could wind up back at square one without a home too.

At FrontDoor.com, HGTV’s award-winning real estate site, you’ll find ten unusual home selling techniques. It used to be that a fresh coat of paint and fresh flowers could sell a home, but in today’s market realtors are moving on to use more dramatic tactics. If offering yourself up for marriage to sell a house isn’t an option, you may want to consider offering your inventory as lease purchase homes to move things along.

The article mentions other creative ideas like open house parties with wine, catered food, live music and prizes or home staging using Feng Shui has worked to balance energies and inspire buyers. Some realtors are even going as far as burying statues or medals of St. Joseph in the ground to help their homes sell faster through divine intervention. Home auctions, radio advertising and online advertising are all ways of getting the word out about your properties.

While some desperate sellers throw in deal sweeteners like free cars, vacations, furniture stipends or expensive upgrades, a less expensive option is to help buyers with financing. Since the mortgage meltdown has hurt many people’s credit, especially in the wake of tougher lending criterion, offering a credit counseling program and offering lease purchase homes can really help prospective buyers feel comfortable about their purchases. “A trial run could be just what they need to sign on the dotted line,” says the article.