In Spain, the option of renting a house with the thought of buying it after has become more and more chosen by homebuyers. This mode is a good alternative for those who do not have too many savings because renting a house with the option to purchase it allows the buyer an initial payment which is not too high (it could be a deposit or a small advance of the full amount), and thus during the following years only the rent will have to be paid. Nonetheless, we must point out that this rental price is usually higher than the one that marks the market as both the rent and part of the purchase of the property are being paid. However, everything will depend on the agreement that has been reached by both parties. It is important to bear in mind that the buyer who chooses the option of renting while planning to buy it, can only prolong this situation during five years when the total price of the house must have been fully paid. As we can see, this is about renting a house during some years till the purchase has been made, and thus ensuring the acquisition without the financial expenses that are involved. We can say that it is a kind of extension or extra time for the buyer who does not have to deal with the full payment but who, on the other hand, has the peace of mind that during that time nobody else can buy the property. Once the landlord and the tenant have reached an agreement on the price, then the contract will be signed and hence when it is time to pay for the total amount , then the monthly payments will be deducted from the rental period (totally or partially depending on the contract that was signed).
A LIFELINE FOR THE BUYER
We are living in a time of uncertainty; firstly, the pandemic and secondly, the war in Ukraine. Both of them have brought about a very negative impact on the world economy causing a general increase in prices in every sector, including the price of housing. In this blog, we wrote an article where we made an X-ray on the price of Spanish housing. In that article we stated that, in our country, homebuyers have become increasingly interested in purchasing property, even though many find it difficult to pay for it in these complicated times. Banking entities think it over before granting mortgages and in addition, the Euribor is going to rise significantly which means that homebuyers will find it even more difficult. In this regard, renting a house and having the option to purchase it is a lifeline for homebuyers, especially for those that have more difficulty, as for instance young people. For practical purposes, renting with the option to buy is a kind of mixed contract as it consists of two sub-contracts: on the one hand, the rental contract which will last for the time that was agreed upon (we have already mentioned that the maximum period of time is five years). On the other hand, the contract that includes the option to buy once the rental period has ended. As we have already said, the buyer has the advantage of ensuring the purchase of the house. Nevertheless, it could be possible that the price that was set is higher than the market price when the time comes to pay for the total amount. This fact may happen, that the price of the house drops during the rental period. As occurs with any business, one will have to balance the pros and cons before making a decision.
10% OF PREMIUM
In relation to the premium which is paid when signing the contract, both parties must reach an agreement in the matter of the amount of money, this normally being 10% of the total amount of the purchase. This is an advantage for homebuyers because it is then easier for the bank to agree to grant a mortgage due to the fact that part of the amount of the purchase has already been paid for. However, there exists the possibility that the homebuyer does not formalize, in the end, the purchase of the house and if this happens, the owner would keep the total amount of the premium as a form of compensation. There also exists the option for the extension of the rental contract, in which case both parties must reach an agreement and formalize a new contract.
Picture 01: freepik
Picture 02: pressfoto