[Anonymous]

My wife and I are moving back to Spain. We know the are where we want to live, as we’ve lived there before (It’s in Andalusia). We have been offered a property on a rent-to-buy deal just before, the price of the property has dropped from 260k to 175k, and it is now at 100k. I can’t see it depreciating in value any more, so I’m thinking it’s a good deal…

We want this house as it ticks all the boxes for us, so a rent-to-buy deal seems like a very good option. The owner has asked us to make him a proposal, so we’re trying to work out all the costs we’ll need to be putting away towards our deposit for the mortgage when the rental term is up.

I’m working backwards from the total cost incl legal fees etc, so I can work out how much, and for how long a period,we want to pay rent, and I’m just wondering how far off the mark I am so far. Any advice would be much appreciated.

Purchase price:  100000€

ITP (8%): 8000€

Legal fees (@1%): 1000€

Notary fees (1%): 1000€

Property registry fees (@1%): 1000€

Subtotal fees: 11000€

Total: 111000
We’re thinking of proposing a rent of 550€/month for 3 years, giving us a 19800€ deduction from the purchase price. This means we need a mortgage for 78,200€. Am I right in thinking we will need 20% of that as a deposit (15640€). So in total our monthly costs would be 1289€ (550 rent, 434 towards deposit, 305 towards fees).

Are there any other costs I’ve missed out, apart from living costs, utilities etc? Who normally pays the community fees? Thanks in advance!

 

• This topic was modified 10 years, 8 months ago by Anonymous.

[Mark Stücklin]

Robert,

I’m on holiday so a bit slow to respond in the forum.

Your figures sound about right in terms of transaction costs. The cost that often catches people out, now that house prices have crashed, is what I call the ‘bargain tax’ – an additional ITP that local tax authorities sometimes slap on bargains. This can happen when the sales price falls below the ratable value, and you can easily check if this applies in your municipality. I’m not sure how this might affect you with a rent-to-buy plan because the escritura won’t happen for several years, so it’s probably not something you need to worry about. Worth bearing in mind though.

There will be mortgage costs to bear in mind if you need financing, though I’m not sure why you need a mortgage if you are renting-to-buy.

The vendor pays the community fees, and should hand over the property debt-free, including debts to the community of owners.

For more information on the ‘bargain tax’ read this article:

As house prices crash the “bargain hunter” tax becomes an issue for buyers

[Author]

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