- This topic has 15 replies, 5 voices, and was last updated 12 years, 5 months ago by
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I want to know why anybody would even consider rent to buy!!!
You either rent OR you buy.
If you were to enter into such a contract and the market declines further you are not going to purchase a property for a considerable sum above the current market value.
If the market starts increasing rapidly (miracles can happen), then the seller will simply not sell too you at a sum lower than market value.
This is Spain, you will have absolutely no recourse in the courts. And if you do it will come at a considerable cost and delay.
But hey if someone want to sign a rent to buy contract….
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jp1 Of course I am the seller! and seeing as I was quite prepared to board our place up and abandon it for the foreseeable future, the option of someone living in the property, maintaining it, paying rent and hopefully being in a position to buy it within the next five years is an attractive alternative.
shakeel – I’m fully aware of rip-off Spain and, more to the point, I expect solicitors to try to rip you off whatever country you’re in. I was just keen to hear from those with more experience what the ‘correct’ price should be for that particular job and if a solicitor was actually necessary.
To that end, I discovered that the Unión de Consumidores publish a draft contract….. so I might have a go at it myself if I can’t get a reasonable price from a professional.For anybody interested, the contract can be found here http://www.uniondeconsumidores.info/uploads/Contrato%20Arrendamiento%20con%20opcion%20de%20compra.pdf
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@logan wrote:
More problems arise Ensanche if you get a bad tenant and that’s happening more and more as people lose their jobs. Then you have the expense of more legal work. It’s a rock and a hard place. I would be more inclined to sell for what you can get and be rid of the problem.
I agree and that’s what we tried to begin with. We had a buyer at about 33% under what we paid in 2004 but it’s a country house and, being a growing family, they pulled out when they discovered there was no possibility of getting planning permission to extend.
When we put the place up for rent with the option to buy, we were lucky enough to get 3 interested parties just through word of mouth, so at least we’ve had the luxury of choosing the ones most likely to stick to their end of the bargain. Still a risk though…. there’s no guarantee they’ll keep their jobs in the years to come.I read yesterday that you can buy insurance to cover lost income and legal expenses in case of a defaulting tenant….. probably the highest growth area in the insurance business in Spain!
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I can only offer you my own experience and that of my friends. The risk is great over a 5 years term. Anyone’s life with the best of intentions can go belly up in that time particularly in these hard economic times.
Insist on a substantial cash bond up front to cover any possible legal expenses, loss of rent or damage. That may indicate the financial worthiness of your prospective tenant. Legal contracts are vital, insist on a bank record of payments, don’t accept cash and declare the income to your own tax authority otherwise your tenant will have you over a barrel.
Good luck. -
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@Ensanche wrote:
jp1 Of course I am the seller!
Personally I would keep it simple. You can’t sell at your minimum price, you don’t want to board it up (understandable), then simply rent it, especially if you are going to experience higher legal costs for setting up a contract.
My view is that renting a property is hard enough (and getting worse), I have seen two close Spanish family members rent out properties and almost immediately have the tenant stop paying. In both cases it took several years to get the non-paying tenant out.
I can only imagine a rent to buy contract adds another level of complication to the scenario especially if the tenant stops paying.
I would also agree with Logan, lower the price until you can sell it, being an accidental landlord in Spain is only going to get worse.
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Thanks for your thoughts jp1…. I would lower the price until it sells but time is short as we are heading back to the UK in a little over a month.
Luckily the tenants/prospective buyers are friends of our neighbours and trusted by them. We in turn trust our neighbours, so although none of that guarantees their future financial situation, I do believe that the deal at the outset is being made in good faith. The rest is a risk we’re prepared to take. -
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