Maximise the money made from selling your property with rent to buy!

A Rent to Buy contract is a legally binding arrangement where a property is rented for a specific pre-agreed time period, with the option to purchase the property for a pre-agreed price during that term.


Rent to Buy is an extremely attractive way to sell a property for Vendors who don't necessarily need the capital from the sale immediately and want to:


✓ maximise the amount they receive in total for the property,


✓ have a quick solution to having your property taken care of.

There are a number of reasons why Rent to Buy should be considered when your looking to sell a property:

Increase the number of potential buyers for your property


To obtain the highest amount of income possible for your property, you must create the biggest demand.


This approach opens new avenues of interested purchasers.


It drastically increase the number of genuine potential buyers that are interested in your property.


This is even more the case since Brexit!


We have a large amount of qualified buyers on our database, who have have brought a business and have funds, however they won't be able to obtain a mortgage until they have tax returns here in Spain.


This means they can pay a healthy deposit now, pay monthly fixed amounts for a fixed period of time and then complete in a set amount of time (once there has been enough time passed to get Spanish tax returns, so they can access a standard residential Spanish mortgage).

Receive money for your property quicker


When putting your property on the market for a set amount that you want to make for the sale, often it can take some time to sell.


If you are not wanting to live in the property this can lead to the property becoming vacant and not bringing in income.


By using rent to own, there will be a tenant paying you rent month after month until the completion date. This can be put into place quickly.


As well as receiving money quicker by avoiding it sitting empty, it helps ensure you don't have any issues that can come from having an empty property (damp and general maintenance issues or even break-ins). 

No more Financial burden


We can quickly find you a tenant who is happy to pay you a deposit of 3-10% of the agreed purchase amount, monthly rent for the duration of the agreement and buy your property for an agreed amount, within a certain period of time.


All the funds you receive can be used on anything you like. It helps offset any mortgage repayments, community fees, expenses in general etc, meaning the property is no longer a financial burden to you!

Sell in a way that suits you best


As a seller you gain more flexibility and it's easier to negotiate to have your needs met.


This is because you give the person buying your property the flexibility to purchase it after renting it for a period of time, so in return there's no need to sell it below market value to start receiving money for your property.

Make money whatever happens


All the funds received are towards the purchase price of the property. If for any reason the Tenant/Buyer does not buy the property then all the funds you have received


This includes the deposit of 3 -10% of the purchase price and rental payments which combined equals a higher amount you would receive compared to standard rental agreements. 

Have your property maintained at a high standard


By utilising rent to own you have a tenant that is genuinely interested in buying the property in the near-future, not just renting it long-term.


Because they will eventually buying the property, Rent to Buy Tenants are also more likely to care for the property when compared to standard long-term Tenant or multiple holiday Tenants.

More Details of Rent to Own in Alicante:


As discussed above, Rent to Buy contract is a legally binding arrangement where a property is rented for a specific time period, with the option to purchase the property for a pre-agreed price during that term.


There is full flexibility on how each agreement is structured to meet the needs of both you the Landlord/ Seller and the Tenant/Buyer.

 

The deposit and all the rent monies paid to the seller during the rental period are removed from the pre-agreed sales price at the time of the completion.


If for any reason the buyer does not purchase within the specific time period agreed, then the seller can keep all the funds paid up to this point and the agreement is finished (the seller keeps full ownership).


The steps of Rent to Own in Alicante:

Agree an upfront initial payment (fully flexible to meet your needs: usually between 3% – 10% of the purchase price)

Agree a monthly rental amount (all of which will contribute towards the purchase)

Agree a sales/purchase price

Agree a term within which to purchase the property (usually 12 – 36 months)

Sign a contract based on the above agreed amounts

The buyer moves into the property as a “tenant buyer”

The tenant can buy the property within the agreed term, with all the rent paid being removed from the pre-agreed purchase price

Upon the agreement expiring (12-36 months – which ever is agreed prior), if the “Tenant Buyer” does not purchase the property, the Tenant Buyer is not entitled to any of the money they have paid and the agreement finishes.

In Summary


In summary, this approach enables sellers to start receiving money from the property quickly and allows buyers to start to buy their new home in Spain with as little as 3% initial deposit.


The Rent To Buy contract is legally biding and straightforward.


It can also be notarized and registered with the land registry, however in this case the Tenant Buyer would need to pay buying fees at this point (increasing the total funds they require).


We have partnered with consultants and lawyers who can advise each party.


Local Life do not offer legal or financial advice as part of their service, they only act as introducers between Buyers and Sellers.

Local Life suggest that both buyers and sellers seek legal advice as part of their contractual agreements.

FAQs

Here are a few answers to common questions but to clarify, you have FULL FLEXIBILITY with regards to what's agreed in each individual agreement.

  • CAN I REMAIN IN THE PROPERTY FOR THE DURATION OF THE AGREEMENT?

    Yes, absolutely. The contract used would be different because it's not a rent to buy, the buyer just has an option to buy.


    You have total flexibility on how you put the deal together, you could make an agreement that:


    The buyer has an option to buy within a certain period, at a certain price, whilst you stay in the property.


    This is ideal if you have somewhere that you can move to at any point, as they can purchase the property within this period of time.


    The buyer has an option to buy in a certain month/year, at a certain price.


    This is ideal if you want to move somewhere in the future, but at a certain date (as they purchase the property at specific period of time).


    The property is brought at a certain date but you are able to remain in the property as sitting tenant.


    This is ideal for if you want to remain in the property but would like money sooner. Also, you can negotiate the rent to be lower than the normal, by selling the property at a lower price. 


    This has been used by people who want cash to enjoy their remaining years (they sell their property below market value, but can remain in the property rent free. The buyer only has the ability to move in, after the sellers pass).

  • CAN YOU CONFIRM WHAT POINTS I NEED TO CONSIDER WHEN LOOKING TO SELL MY PROPERTY IN THIS WAY?

    ✓ What amount of time you are happy to give the buyer the option to buy your property?


    ✓ Are you wanting a monthly payment within this time frame?


    ✓ What access does the buyer have, within the period of time that they can purchase the property?


    ✓ What amount are you happy to receive in total for the purchase of your property?


    ✓ Is there any other conditions that you would value?  


    (I.e: to be able to stay in the property for a set period of time / guaranteed monthly payments for the term of the agreement / guaranteed purchase at a certain date / the deal fully managed by a third party, for the duration of the agreement).


    ✓ How much do you ideally require as a deposit at the start of the agreement?

  • DO I HAVE TO TAKE A DEPOSIT / INITIAL PAYMENT UPFRONT?

    Yes a deposit / initial payment is standard and binds the agreement, however, the amount can be as little as you like and it helps you negotiate other element that may be more important to your circumstance. 


    In the case of a rent to buy contract, the initial deposit that sellers receive are typically 3% – 10% of the property price. This payment comes off of the pre-agreed purchase price.

  • WHAT SHOULD HAPPEN IF THE TENANT/BUYER WITHDRAWS FROM THE CONTRACT DURING THE TERM?

    Each contract is bespoke and it really depends on how flexible you are with the amount you sell it for.


    Based on selling at true market value and there isn't anything not disclosed at the start of the contract by the Landlord / Vendor, which means the property cannot or should not be bought (such as it’s an illegal build, etc), unless agreed otherwise the agreement outlines:


    The Tenant / Buyer walks away and has no recourse to have the rent, the initial payment (or any other stage payments) returned to them. If they have made improvements to the property, they cannot claim any compensation for this either. 

  • WHO PAYS THE UTILITY BILLS DURING THE AGREEMENT PERIOD?

    Like a standard rental contract the utility bills are paid for by the Tenant/Buyer. These includes electricity, gas, water and also Wi-Fi.

  • WILL A RENT TO BUY MAKE IT EASIER FOR THE BUYER TO OBTAIN A MORTGAGE?

    Yes, the reason is that if the contract is created in such a manner that 20% or more of the price of the property is paid in deposit/rent by the time the option to buy is exercised then the LTV (Loan To Value) aspect of the mortgage will have been attained. 


    Of course, proof of income will be required to satisfy the mortgage lender that the remaining 80% can be paid. 


  • WHO IS RESPONSIBLE FOR THE MAINTENANCE OF THE PROPERTY INCLUDING ANY PRIVATE POOL OR GARDEN?

    This can change depending on the needs of both parties. If you are flexible on this, we suggest to treat it like a standard rental agreement for the duration of the rent.


    However, you have full flexibility when outlining your ideal criteria to us (you could add that all general maintenance up to a certain value is paid for by the Tenant/Buyer and then larger issues will be addressed by property insurance).

  • ARE THERE LEGAL FEES TO PAY?

    Yes, all parties should use a lawyer and there will be notary fees. You can outline you need the tenant/buyer to cover this, if the lack of access to cash is the reason you are undertaking the agreement in the first place.

  • WHAT HAPPENS IF PROPERTY PRICES INCREASE OR DECREASE SIGNIFICANTLY BEFORE THE OPTION TO PURCHASE IS EXERCISED?

    Both parties are committing themselves on a pre-agreed price that in a few years’ time will be the option to purchase price. 


    This is set and is not negotiable once the Rent To Buy contract is signed, unless of course, there is a specific clause within the agreement saying that it can be renegotiated.

  • WHEN WILL THE BUYER OWN THE PROPERTY?

    The property will not be in the ownership of the Tenant/Buyer until the option has been exercised and the full option price paid.

  • IS THE CONTRACT LEGALLY BINDING?

    Yes, the contract is created by a lawyer and is signed in front of a notary. The latter will ensure that your option to buy is listed with the Spanish property registry. 


    Our independent partners can assist you with all aspects of the legal process or of course you can use your a lawyer of your own choice.

  • WHO PAYS THE IBI (TOWN HALL TAX) AND BASURA TAX (BIN TAX)?

    Each contract is bespoke and unique however the IBI will continue to be paid by the Landlord/Vendor as this is a tax and the property still belongs to them until bought outright at Notary. 


    The Basura is almost always paid for by the tenant.

  • WHAT IF THE PROPERTY IS REPOSSESSED BY MY MORTGAGE LENDER BEFORE THEY BUY THE PROPERTY OUTRIGHT?

    Please be upfront with us before listing your property with us and once the agreement is in place you will have cash flow to pay the mortgage so this should not be an issue.


    However, just to ensure the question is answered....


    The tenant/ buyer would have a right to rent the property if it’s repossessed, as the Landlord (in this case now the bank) must respect a long-term tenant. 


    The tenant/ buyer may no longer have the option to exercise the purchase of the property in the same conditions as agreed with the original Landlord initially. 


    The tenant/buyer may have to raise the funds at that time and pay off the outstanding mortgage on the property if they wish to buy it from the bank. 


    Not to mention that if there was an additionally paid deposit they would likely forfeit it in the event of a foreclosure. However, as the tenant they will be given first refusal to purchase the property and of course bank repossessed properties are usually great value.

  • WHAT IF THE TENANT STOPS PAYING THE RENT, CAN I EVICT THEM?

    Until the option to purchase has been exercised the contract will be as per a standard rental contract. 


    It is suggested the contract states that should the Tenant fail to pay rent on a single occasion then the Landlord has the automatic right to evict them as per a standard rental contract.


    If this is of concern to you, speak to us about a fully managed option where we take responsibility for all payments throughout the agreement.

  • WHAT HAPPENS SHOULD THE TENANT/BUYER NOT BE ABLE TO PURCHASE THE PROPERTY AT THE END OF THE CONTRACT TERM?

    Again, it depends on what is agreed at the beginning of the agreement.


    If at the end of the term the Tenant / Buyer is unable to exercise the purchase option, then other alternative routes can be agreed by both parties to ensure the deal continues, the most obvious being to extend the option term.


    However, they have relinquished their right to purchase the property at the pre-agreed option price so this can be renegotiated if property values have increased.  


    If the tenant/buyer has not got the ability to purchase at a specific date in the foreseeable future, by default, they have relinquished their right to purchase the property and the contract ends.


    In this case, they have no recourse to have any payments made refunded to them.

  • WHAT SHOULD HAPPEN IF THE OWNER DIES BEFORE THE PURCHASE OPTION IS EXERCISED?

    In Spain the heirs of the deceased must accept the inheritance with all the conditions that the assets have. In the case of a Rent To Buy this means that the property has a contract signed allowing the tenant to buy the property for a pre-agreed price within an agreed term which has to be fulfilled.

  • IS THE CONTRACT WITH LOCAL LIFE?

    No, the Rent to Buy contract is between the owner of the property and the Tenant/Buyer we find for you.


    Local Life act as a marketing agent to bring both parties together in the same way that a standard property sale/purchase is facilitated by a Real Estate Agent. 


    The only contractual arrangement with Local Life is that you accept the terms and conditions when you register with us including accepting our fees if/when you enter into the contract and sell. The total fees our 5% of the agreed sales price and this can be settled in a number of ways, that suit your needs best.

    If you do want to just deal with us, then this can be arranged, just mention it on the contact form.

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