Try Before You Buy - A Change In The Property Market

Published on 18/05/2011 in Buying Process

The Christmas and New Year period is traditionally a quiet time for estate agents with enquiries picking up in mid January and clients starting to arrange viewing trips in February to coincide with school half terms.

Nothing however could have prepared us this year for the huge increase in demand for long term rental properties. The phone has not quite rung off the hook, but it has not been far off the case recently.

Over one particularly busy weekend I had clients flying in from Canada, New Zealand, Madrid and London all to look at long term rentals. Luckily I managed to accommodate all of them with a great selection of properties in the Hondon Valley and La Romana area.

Rent before you buyOne was so impressed he has signed a rent to buy contract as he has found his dream home perched on the side of the valley overlooking the surrounding Sierra Crevillente mountains and national park. He was so happy to have found his perfect home and the owners who initially had just decided to rent until the market improved were over the moon to have found a buyer for their beautiful home.

This past Friday I photographed a villa for long term rental at 9am, I had it online on our website www.hondonvalleyhomes.com by 10am and the phone started ringing fifteen minutes later. One client jumped in their car in Southern Portugal and drove the 7.5 hours to Hondon and took the villa on a long term rental on the spot. Fortunately there is a lovely converted old finca near my office which has a restaurant, bar and hotel so the clients could rest after their exhausting and exciting day.

Peoples reasons for wanting to make the move to the Hondon Valley and surrounding areas, whether it be a short hop from the coast to avoid the hustle and bustle, or a move from the madness that is central Madrid are wide and varied.

I have had young clients from the UK who have sold up or taken redundancy money and full of ideas, hopes and aspirations have made the move. They all know how difficult it will be, but they work on the idea that if they can succeed now when times are very difficult then when the good times eventually return they will be in prime position to benefit.

I have recently had a retired rock star from the sixties who now works for the university in Madrid come to the area to retire from the teaching profession and set up an internet based learning business. I have had a retired airline pilot who mistakenly typed Hondon into Google rather than London and found my website. He was intrigued enough to fly in from Canada to explore and now lives in the area.

Then of course there are the Belgium's, Dutch, Danes and Scandinavians who are fleeing the cold temperatures of northern Europe for the balmy climes of the Costa Blanca South. There is even the odd Brit still making the move, but they only account for about 20% of my enquiries nowadays. One common theme though is they all want to try before they buy

So the market is not as stagnant as some would have you believe. There is a little glimmer of light at the end of the tunnel.

My advice for those looking to rent long term or those looking to rent out their properties long term are to use the services of a reputable agent. Insist on a legally binding, watertight, lawyer written rental contract as this is there to protect both parties and most important of all enjoy yourself whilst you are here. It is only when you leave that you realize what you are missing.

Written by: Steven Bromley

About the author:

Steven Bromley has lived in the Hondon Valley on the Spanish Costa Blanca South for the last 5 years. Having worked marketing international property in Spain, the Canary Islands and the UK for the last 20 years, he has seen the many ups and downs involved with the sales and rentals market. His company Hondon Valley Homes is an established leader in the area. He works alongside an extensive network of collaborating agents both here in Spain, in the UK and Northern Europe as well as advertising on all the popular property portals.




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Comments:

Mabel Morten said:
01 December 2011 @ 01:51

Rent to buy is ok but make sure the agent only gets the rental fee which is about the amount of monthly rent say 500 pm rent agreed agent gets 500. When house completes then agent should get the agreed commission paid in full and not before . My friend did a similar thing to this and the agent got full commission at start of contract but the tennant decided not to buy and is now wanting to re negotiate the price,the agent does not want to know of course as he has already been paid his commission, if my friend had only paid agent a rental fee-and not full commission then the agent may want to know.... it's now in the hands if her solicitor, before getting into this type of thing don't take the word of an agent seek legal advice . The only winner in this deal appears to be the agent ...


Susanne said:
16 August 2011 @ 18:57

It seems to me that Rent-to-buy is most risky to the tennant/buyer who stands to lose his/her money (perhaps £20K+) in a very short period - the Agent (and I agree with Tom, are reknowned for being greedy - history is testament to that!) and the seller/landlord/agent lose nothing (maybe some time) ... what's more it pays the seller/landlord/agent if the tennant/buyer backs out early... as the greedy Agent just remarkets and pockets another double fee - sheep in wolf's clothing I think !!

So it's not for the majority I think, an option maybe, but be clear of what you are getting into, at least know you want to be in that house, in that area as much as possible or you maybe thinking you've been mugged by the agent!... who can afford to lose the 10% deposit these days?



Patricia said:
01 June 2011 @ 14:40

Steven:

I agree entirely with what you say about tenancy agreements:
"Insist on a legally binding, watertight, lawyer written rental contract as this is there to protect both parties ".

And you are indeed entitled to your previosuly agreed commission on the eventual sale. This is true of agents in any part of the world.

I haven't been long on this forum but I continue to be bemused and often exasperated by the tendency to want to do things "on the cheap", rather than using the services of a professional, whether a lawyer, tax advisor, accountant, agent, etc.. Wrong advice is dangerous, and (I imagine) most people on these forums are not professionals on the law, for example, or on tax matters. It is a kindness to give people useful information and to share, but too much wrong information IMO is given out.

Best wishes
Patricia



Steven Bromley said:
31 May 2011 @ 19:43

Hi Tom,

The agent does act for the vendor, but we also have to listen to the clients and their demands. I can understand your comments however how many other business's would sell a product and then wait 18 or 24 months to be paid. Please remember that as an agent I do not get paid until the property is either sold or rented. I make the initial investment in time, advertising, marketing, conducting viewings etc. I am not looking for sympathy just an understanding of how the industry works.

Just as there are thousands of unsold properties there are hundreds of agents for vendors to chose from. I survive based on the excellent reputation and years of hard work put into building that reputation and by going the extra mile on behalf of both vendors and clients.

Yes you may be surprised to learn I am an agent with morals. There are some of us out there.

The rent to buy contract is a mutually beneficial agreement in which all parties benefit. The vendor finds a buyer that would otherwise have not been able to purchase and the tenant is given the time to get their financial affairs sorted in order to purchase hopefully their dream home; and the agent...... we earn a commission that has been previously agreed.



Tom said:
20 May 2011 @ 01:06

I guess it does allow people to try before they buy but as the vendor, in my experience, it favours the greedy agent who likely keeps pocketing extortionate contract fees time and again (for the rent contract and ultimately the % fee when a sale is agreed). And I thought the agent acted for the vendor?

At the end of the day Spain has more properties than buyers so it's quite easy for agents to persuade the vendor to take less or do these rentals than market value on the basis that we are in a buyer's market and the next buyer might be a year or so away!

The thing not mentioned in this article is the extortionate 18% tax the Spanish Government want from rental income... so beware the costs of renting your property out can be quite high.


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