NSW Fair Trading Minister, Linda Burney, today issued a warning to aspiring NSW home owners not to be lured into a dodgy rent to buy scheme. 

The warning was prompted by the conduct of Diamond Star Holdings Australia, a Bathurst-based operation run by Michelle Kumar.

“In a time of increasing interest rates and high rents greater numbers of aspiring home-owners are turning to alternative means to buy a home,” Ms Burney said. 

“Rent to buy schemes – also known as vendor finance, vendor terms or wrapping – offer the option of buying your own home with a very small deposit and without the obligation of having to take out a mortgage. The remainder of the loan is paid as rent until the loan is paid off,” Ms Burney said. 

“Sounds too good to be true? Be careful – it usually is.

“These rent to buy schemes generally target lower income earners, those who may have been rejected by a bank and those who haven’t got the means to save for a deposit or take out a mortgage.” 

Diamond Star is being investigated by Fair Trading for misleading and deceptive conduct and its inability to account for money it accepted from participants in its scheme. 

“Advice to consumers who have entered into a direct debit agreement with Diamond Star is simple – contact your financial institution and cancel the direct debit immediately,” Ms Burney said. 

“We have had reports that the company may have amended their operation or ceased trading, however consumers who have had dealings with them, should follow this advice.”

Diamond Star first came to the attention of Fair Trading when six complaints or enquiries were received from people in the Central West concerned with the possible risks involved in investing in the rent to buy program. 

“Diamond Star offered assistance to Centrelink clients and single income families to buy their own homes but some of those who received the advertising material were worried about signing a direct debit to Diamond Star.

“Part of the process involved signing an agreement that their fee was fully refundable at any time and that Diamond Star would establish individual trust accounts into which their payments would be deposited and $700 interest paid.”

However, Fair Trading’s investigation found that Diamond Star had not accounted for $60,650 it accepted from participants and had not established trust accounts for them. 

Ms Burney issued the warning about Diamond Star Holdings Australia and Michelle Kumar in accordance with section 86A of the Fair Trading Act 1987 which gives her authority to alert consumers about unfair business practices. 

Anyone with enquiries or complaints about Diamond Star Holdings Australia or similar rent to buy schemes should contact Fair Trading on 13 32 20.

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