Published by carratelli4 years ago

Rent-to-buy (Rent-to-Own) is a new type of contract that allows you to enter into a rental agreement that can then be converted into a purchase agreement. The latter is not mandatory, but merely an option linked to the rental, which can, however, be included in the initial contract.

The rent to buy Rent-to-own is a new type of contract that allows you to enter into a rental agreement that can then be converted into a purchase agreement. The latter is not mandatory, but merely an option linked to the rental, which can, however, be included in the initial contract.

 

In essence, it is a contract that combines a rental agreement and a preliminary sales agreement for a property.This means that the owner immediately hands over the property to the tenant (future buyer), who pays the rent; after a certain period of time, typically 3-5 years, the tenant can decide whether or not to purchase the property, deducting a portion of the rent paid from the price.

 

The monthly payment, however, will be higher than a standard rental fee; part of it constitutes the rent, which is paid for the use of the property, while the other will be used as a down payment on the final price of the property, which will reduce the final sale price.

 

The law provides that the tenant has the right but not the obligation to purchase the property, therefore he is not obliged to buy the house after the "rental" period. Obviously, and also to protect the seller, the parties can stipulate the obligation to purchase, but at that point we would not be talking just about rent to buy. It is important to know that the deadline within which the tenant can decide to purchase the house is established by the two parties within the 10-year time limit.

 

The main advantage is the possibility of finding a higher number of potential buyersThe risk is that the tenant decides not to buy the house. In that case, however, the owner can keep all of the money paid (which will be a higher amount than a normal rental fee).

 

To better understand: if we take for example the sale of an apartment for the price of 150,000 euros, where the rent is agreed at 1,000 euros per month, we will have that a portion such as 500 euros will go to constitute the rent while the remaining 500 euros will be charged as a deposit on the price. In the end, the tenant, with a 4-year rent-to-buy contract, will end up paying in the sale negotiation, not 150,000 euros but 126,000 euros since 24,000 euros will have been previously paid in monthly rent.

 

Contact us for more information.

Carratelli

Get the latest news

To get to know our properties for sale and rent in advance and to be always up to date on the wide range of services offered by our real estate agency, subscribe to the newsletter.