March 3, 2012 at 8:46 pm #56545
I am looking at the option of renting to buy. I found this property (1 bedroom appartment) en la comunidad of Valencia, some 15 minutes from Javea to the North. The company selling the property is CAM Mediterranean, estate agents of caja CAM. Did anyone buy using the option rent to buy? Does anyone knows if CAM is a caja worth dealing with?
Any thoughts will be very much appreciated.
Many thanks in advance
March 3, 2012 at 9:17 pm #108045
CAM Bank if my information is correct had been created after the of merger of some of the savings Banks. Option to buy or rent is a very new concept in Spain and sadly like all things in Spain it never ever does half the things it says on the tin. Spaniards dont like to think through.
Renting, from a private lanlord you will have some leverage. Against the Banks you will be struggling to enforce your rights. Lets face it most of us buy in Med Countries for the relax life style away from big utilties companies, traffic wardens, Speed Camera, obstrusive vigilance of innocent citizens, third world service at first world charges ( rant over !!! )
Please read the very small print one hundred times irrespective of buying or renting.
If you can rent at this stage, ensure fixing the future purchase price that is reflected in today’s market conditions. Further if you decide to buy in future you should insist in gettting a credit of the amount of rent that you would have paid against the agreed purchase price.
Renting will give you the flexibilty. If you dont like living there, change in circumstances, nasty neighbours etc it will be easy to give notice & move on. Also if you buy in future you may find a better exchange rate in future years when EU economies would have stablised & as UK is ahead of the curve you would be in a better place. On the other hand the interest rates on Spanish mortgages would have gone.
If you were planning to buy in cash. This I would not advice for many reasons one being taxation of non residents.
Looking into the crystal ball the economic arguments may negate each other. The benefit of renting would gives you the flexibilty, you dont have to incur the 15-20% buying/selling cost. I do not see prices increasing 15-20% in the near future. I hope this helps.
Life more grey than black & white.
March 4, 2012 at 3:33 pm #108046
CAM is a failed Caja who lost millions in the property crash and alleged fraud by it’s senior executives. The Caja was nationalised by the government and have now been taken over by Banco Sabadell a medium sized bank based mainly in Catalonia.
Their property portfolio is extensive all across Spain and they are struggling to shift it even with discounts. The portfolio has been ring fenced by the government so Sabadell will not incur any losses from it. In other words they can now wait for market conditions to improve and not be pressed as CAM were to sell them off.
Banks have to operate within the law and Spanish law is generally on the side of the tenant so provided you get a lawyer to check through any agreement you make it should be OK.
Consider this, if the banks thought property values in Spain are likely to rise in the near to medium term they would sit tight and not rent them out. Also the contract price to buy is likely to be more than the current market value. You could probably buy a similar property now as a cash buyer at substantially less but I would not advise it.
Even though they may reduce any rent paid from the purchase price this ‘discount’ will have been factured into the deal. Banks never really lose.
March 4, 2012 at 3:49 pm #108047
” In other words they can now wait for market conditions to improve and not be pressed as CAM were to sell them off “
Just to be clear. Due you mean if CAM as a Caja could have reduced prices etc to shift stock. Now under the wings of “Banco Sabadell” cannot do so ??? This means that Banco Sabadell now has unsold stock from CAM on which there is no margin for reduction. Whilst the stock of unsold of Banco Sabadell stock can be negotiated ??? All this is theory as we all know how Banks operate in Spain.
March 4, 2012 at 4:44 pm #108048
I know a few British people who have been unable to withdraw money invested with CAM bank. Some have been told it could be years before they get it back. About as good as their property guarantees. Wouldn’t touch them 👿
March 4, 2012 at 5:52 pm #108049
Before nationalisation CAM were offering buy to let on every property they had. Since then their portfolio has effectively been parked in a bad bank underwritten by the government but under the control of Sabadell. Now only a few selected properties are marked buy to let on their web site.
I take that to mean the imperative has now changed.
Sabadell who control CAM presumably could not care less about the ‘bad bank’ there is nothing in it for them. They want the CAM branch network in regions of Spain they were weak in before.
I have investments in CAM and moving the money is not a problem.
March 4, 2012 at 7:55 pm #108050
I was given a form to sign in order to reserve the flat (I am in definitely no rush to sign anything unless I know the ramifications if something goes wrong).. I got home yesterday and saw a march in Alicante on TV which funnily enough started from one of the Branches of CAM in the centre… It was to demonstrate against banking scams but not solely about CAM and other banks as well .. I will surely be contacting a lawyer and doing more research before signing anything..
Thanks for your advise
March 4, 2012 at 9:19 pm #108051
Take advise from a Lawyer outside Alicante & Valancia region. As you just do not know what local connection these lawyers have.
March 4, 2012 at 9:41 pm #108052
I personally think schemes like this (eg rent to buy) are just opening up a whole host of problems for you. You either rent or you buy.
A 3 bed apartment in my complex (front line) can be rented in the region of 350 Euros per month. This complex is one of the best in the resort. Advertised sales values of similar 3 bed apartments in the complex are around 200,000 Euros.
Picking a representative purchase cost of 12% then to buy one of these apartments at 200,000 Euros will cost 24,000 Euros. For that sum you could rent for 5 years!
The maths don’t make sense to buy unless you have really strong reasons to purchase. Renting is a good idea, buy why straight jacket yourself into a rent to buy scheme that I can’t believe for one moment offers any advantages over simply renting form a private landlord.
March 4, 2012 at 10:40 pm #108053
Although your query was mostly about the mechanics of rent to buy, may I just pick up on something else in your post? Your description of the location is slightly ambiguous, it could mean Javea is to the North of the property, in which case fine, you’re looking at a very decent area around Balcon al Mar, but if you mean the property is fifteen minutes North of Javea, be careful you don’t mean it’s ten minutes South of Denia, which is a different proposition, with different property values. May I suggest you put a mark on the map where the property is located and ask yourself which is the closest town?
As for rent to buy, I’d say JP1’s got this right. Rent to buy was a hybrid developed to deal with buyers being priced out of the market by what we can all now see were excessive prices. It depended on two fundamental assumptions. First, the rent would be less than the mortgage repayments and secondly, because property prices were commonly believed to be rising, there was value to the renter/buyer in fixing the purchase price at the time of the agreement. It’s not evident that either is the case now. This is a completely different product from buy to let, referred to above. Buy to let is about property as an investment, rent to buy is about property as a home and whilst everyone’s personal circumstances vary , there will be few for whom rent to buy is a good option just now.
March 5, 2012 at 8:43 am #108054
There is one positive point in these CAM rent to buy schemes. They give the tenant a 7 year secured lease with option to buy at a set contract price within 5 years and a decreasing return of rent paid down to 50% after five years.
Try that with a private landlord the best you will get is 6 or 11 months rental contract.
March 5, 2012 at 10:12 am #108055
The prices are usually set higher than the current market value.
March 5, 2012 at 11:01 am #108056
Can anyone give me a link to this scheme?
March 5, 2012 at 1:03 pm #108057
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