Rental purchase, difficult in a slow market

There is no one formula, so, if you decide on rental-purchase, you must jump for the best offer: one in which a greater percentage of income is allocated to pay for housing when you agree the purchase. Do not forget that rents are falling and buying a flat could save you money.

Rental purchase is as an interesting alternative for developers: while they do not sell their houses, they receive the rental income which goes towards making their financial obligations. It also seems attractive to buyers who, for financial reasons can not afford to buy a house: for them it is a way to get that twenty percent saving so that the bank will finance them later with the remaining 80 percent. 
 
But it is not so simple. For buyers or for sellers. The parliament members of Convergence and Union appear to have reflected the demands of the former and, along with the Popular Party, have urged the Government to amend the Urban Leases Act to include the specifics of contracts with rental purchase. C&U proposes that the period of rent of such contracts not exceed five years or more, otherwise, it is for the buyer and seller to agree on. The promoters wish is to sell quickly. 

Thus one of the promotions that are marketed using this modality in Madrid, rewards those who agree to buy as soon as possible. The first year, the discounted price of 6,000 Euro is paid for as a deposit and with one hundred percent of the rent paid a reduction of 18,000 Euro is given. However, if you decide to purchase in the second year, the discounted price is 6,000 Euro of the rent paid the first year, but only 80 percent of the rent paid in the second year. The discount also is reduced by 4,000 Euro. And if the rental purchase is finalized in the third year running, the rents paid in that year do not shy away from the final price paid. The purpose of the promoter is selling the property as soon as possible. 
  
The buyer who decides to go this route to access housing, must take this into account: what percentage of what you pay in rent will eventually lower the final cost of the property. Another key aspect is the price: Was it negotiated previously? Or afterwards? According to a warning from Fernando Rodriguez, RR Acuña y Associates, even though by negotiating the price beforehand we avoid problems in the future, we must bear in mind that the final mortgage is granted by the bank with reference to the valuation at the time of purchase. What if the price of the property when you finally own it is lower? The bank will give you less capital than you expected. In the next three to five years, the surest thing is that housing will not rise.

A more expensive rent
  
You must also be aware that the rent you pay will be more expensive than what you can find in the area. The developer must obtain rental return and, furthermore, the procedure of putting their housing up as rental purchase makes it expensive. Therefore, Rodriguez recommends doing the math to see if it is better to pay a more expensive to pay rent or if you prefer to pay less and save on your own to buy a home. Moreover, it is not clear that the rents paid to amass capital reaching 20%, making it possible that the bank will grant a conventional mortgage for the remaining 80%. Rodriguez from Acuña does the math quickly: in a house costing € 200,000, 20 percent is 40,000 euros. 
  
To reach that amount you would have to pay rent of 667 Euro per month. To cover expenses and the demands of the developer in terms of profitability, the rent would rise at least up to 1,000 Euro. An expensive rent for a house of that price. Developers find it more difficult in an environment where rents are also coming down. Therefore, they also are being forced to lower their goals. In fact, in the previous example, the developer has lowered the rental of a property of 80 feet and two bedrooms in Carabanchel from 1,100 to 900 Euro per month.