Generally a very bad deal for whoever is trying to do the buying. Generally overpriced, the poor tenant repaints and tidies up like crazy trying to add value and unless the market is really buoyant they really can't add enough (and being amateurs often make a mess of things). The agreements I have seen have all said that the extra rent paid as a deposit is not refundable if the deal doesn't go through, then banks tend to turn around and demand that the deposit be saved in the buyers name and as that hasn't happened they won't give them a loan. A lot of these buyers aren't going to meet any banks credit criteria anyway as they have poor credit ratings that they aren't going to live down in the two or three years they are going to do the rent to buy.
I have seen a couple work out (and seven or eight where the buyer walked off out of pocket) but one was a completely reasonable deal done for a friend (in that they bought the house, the rent covered the mortgage and outgoings and the friend lived in it and paid another $50 a week into a joint bank account and at the end of three years the house was sold to the tenant for $15000 more than it cost. The market had gone up a bit, the tenant had put in a garden and tidied things up and it worked well. Another one was a family deal.
Probably a darn good deal from a shady landlord point of view - how to get extra rent for your property and chances are you'll keep the property and the extra rent...
