Justin published an article by us a while ago : "In times of recession, imagination is needed" regarding renting with an option to purchase.
The question is now: Now that prices are decreasing and financiation is so convinient , is this still an interesting formula for those willing to buy and willing to sell? Or is it prefered to directly buy/sell?
Our opinion is the same for buyers and sellers as we always try to look into win-win shcemes:
Sales are a considerable option again, but still prices will keep decreasing till 2012. Anyhow, it is a good time to start looking at options as the bargains, rebate period is definitely open and you can certainly find the price and the mortgage you need now.
I would also pay attention to the fact that waiting to last-minute offers for the sake of price decrease will certainly come with a decrease of available units too. So make a balance of prices and availability.
Another aspect to consider is the Euribor staus these days. But the Euribor factor is just something to consider if you hire fixed rates mortgages, if you hire a variable financial product, any variation in the future will affect ( both positive and negatively) the price of your mortgage instalments.
So mainly: current prices and availability are the factors to consider.
If you decide to go for a renting with option to purchase, It is interesting to set a timeframe till the end of 2012 to finally fix the price as it seems the decreasing of the prices will last till then. According to good analysts 2013 will be the year of stabilisation and start of growing.
This way you can start habitating/enjoying a flat you will be paying a 2012 price for.
The clause of the contract you need to use is as follows:
“The parties agree that before the term of the present contract, ...........YEARS, comes to an end, the tenant should be able to acquire the property of the real estate – object of this lease.
To purchase the property, the tenant must formally inform the landlord about it within the last month before the date of expiration.
In case of possible purchase the sale price of the dwelling would be the normal market price of the said moment. This price will be reduced by the amounts already paid as rentals.
The sale of the real estate would be formalized by a public deed, free of charges. And the payment of the whole agreed price must be done in the moment of the deed signature.
Expenses and taxes originated by the sale would meet the requirements of the Civil Code.
Any of the parties shall be able to register this lease purchase contract in the Land Registry. The cost of the registration would be paid by the party who promotes it.
Of course, we always advise you to use a good lawyer to take charge of the drafting of this kind of contract.
Best week ahead,
Maria
www.costaluzlawyers.es
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Autumn colors in Ribera del Duero, by Jesuscm ( away fro few days) at flickr.com