Many people have already taken the step to purchase their place in the sun in Spain. Most people arrived on an inspection trip with a cash deposit which, when converted into pounds, seemed a relative pittance. They'd usually go back having chosen a place and would get a Spanish mortgage at half the interest rates they were accustomed to paying in the UK. Nowadays it seems a little more complicated. Interest rates have risen, banks don't seem so keen to lend any more, and the pound has dropped in value against the Euro. But does this mean that your dreams of a place in the sun are shattered? No! We will explain to you how you can still move into your new home, for no more than the price of a monthly rent!
As the market slows down, new opportunities arise. It is the ability to spot and take advantage of these opportunities that make the difference between achieving your dream or not. One of these new opportunities which has been initiated by Spanish developers is the renting out of their key-ready properties, whilst giving these tenants the option to buy the property if they choose to do so. This type of agreement is better known as "Rent-2-Buy". This is how it works:
A Rent-2-Buy contract is a contractual agreement between a tenant and a property owner, where the tenant has the right to buy the property after residing in it for a specified period of time. This period is determined in the contract and normally varies between 1 and 5 years. The tenant will have the right to exercise their option to purchase the property at any given time throughout the rental period, without any actual obligation to do so. In addition, if the tenant chooses to buy the property, they will have a percentage of the rent that they have already paid deducted from the purchase price.
Such a rent-2-buy contract gives you as a potential buyer many clear advantages. One of the main benefits is that you do not have to put down a deposit, nor apply for a mortgage before you've decided you're happy with the property and its location. In addition, most first time buyers have to pay rent for the place that they live in, and on top of that, try to save up for their deposit to purchase. With a rent-2-buy scheme, you can get the best of both worlds by using one to pay for the other!
In essence you are buying your way into property ownership and the property ladder little by little and the rent you pay is no longer "lost money".
Equally, you will be able to make all necessary financial calculations to ensure that you can comfortably afford the property without being tied into it if you can't, whilst at the same time allowing your solicitor to make all the necessary checks on the property so that you can avoid making the wrong choice due to time pressures.
Another distinct advantage is that you can move in quickly. You just have to choose the property and make the move. This makes the logistics of your beginning a new life in another country a lot smoother. No more hassle with banks, solicitors and developers whilst you are trying to move, which we all know is already one of the most stressful things that you do in life!
Of course, another advantage for you is that - with this type of scheme - you can decide when it is the optimum time to buy. When you have found a job or schools in the area? When the interest rates are lower? Or when the exchange rates tip in your favour? It's up to you.
There are certain things you need to ensure when entering into a rent-2-buy agreement; First of all, you need to make sure that the rent-2-buy contract is signed in front of a notary. This will ensure that your option to buy is listed with the Spanish property registry and prevent the owner from, for example, selling the property on to someone else. Essentially, you are entering into this agreement because you are looking at potentially buying the property yourself, so you need to make sure that your option is legally valid until the end of your rental period. Furthermore, you need to make sure that the rent-2-buy contract stipulates the following elementary details: duration of the rental period (and thereby the time given to you to exercise your option to buy), monthly rent, purchase price and of course the percentage of the rent that will be discounted from the price should you purchase.