Your Guide To Rent To Buy In Spain - Everything You Need To Know

In Spain there are more options than simply renting or buying a property. It is also possible to do a rent to buy option which is renting a home with the option of buying it at a later date: it sounds ideal, but it can also be fairly complicated. So how do you know if this is the right option for you? 

The rent to buy process is considered to be both an atypical and complex contract, because it involves two separate legal contracts: one to rent the property, and one covering the purchase option for the property. These two contracts are separate but they are also linked, particularly if you use to the option of buying the property at a later date. So what, exactly, is involved in the rent to buy process? And is it a good way to invest in property? Here’s everything you need to know:

What is the Rent to Buy Process In Spain?

Renting a property is a simple process of utilising a property that is owned by someone else, in exchange for a payment, which is known as rent. With a rent to buy option, you are signing a purchase option agreement that means there is the possibility to enter into a purchase-sale contract for the property at a later stage. This means you have the option of investing in property at a time that better suits you. There will be terms and conditions within this contract which will dictate the conditions of the sale, and you will also have to play an optional premium in order to effective ‘reserve’ the property for later purchase.

A rent to buy contract is a single contract that links two legal transactions. During the length of the term of the contract, the leaser of the property can exercise their purchase option, but if you choose not to buy the property within the stipulated period then you will no longer have the legal option to purchase it.

What is Included in a Rent to Buy Contract?

It is important that both the property owner and the tenant agree to enter a rent to buy contract. Once both parties have done so, the terms of the contract will almost always include the terms and details listed below. It is important to note that, due to the complexity of the rent to buy process, you work with a lawyer who specialises in real estate law to draw up the contract.

The contract should include

• A description of the property that will be rented, including its full address and location
• The terms of the lease, which must be for at least 6 months as required by law. The terms of the lease can be longer than the term granted for the purchase option.
• The date that the rental period will begin and the date that the rental agreement will renew.
• The price of the monthly rent and the form of payment that will be accepted for this rent
• The deposit amount for the rental aspect of the contact, and how this will be applied to the purchase price of the property if the purchase option is exercised.
• Any obligations to pay for service fees, and any repercussions of taxes and/ or fees.

Once the lease contract has been agreed and signed, both parties must comply with the terms included in it, provided that none of these terms breach local or national rental laws. If you go on to exercise your option to buy the property then the following ‘option to buy’ terms of the contract will apply:

• It is the right of the leaser to determine whether the which to buy the property that they have agreed to rent.
• The period of time in which the leaser can choose to purchase the property. If they don’t exercise their rights within this time frame then they lose their right to buy the property.
• The price that is agreed for the future purchase of the property. Once this price has been agreed it is fixed, and cannot be negotiated at a later date.
• The payment of an amount in the form of an optional premium (this being understood as if it were a sign of a purchase-sale, and since an exclusive purchasing power is granted to the lessee), and the set of the same: its loss or total or partial refund in the event that the lessee does not exercise the purchasing power.
• What percentage of the rent paid up until the purchase that will be applied to the purchase price.
• How the expenses and taxes from the future sale of the property will be distributed. Each tax will be listed and accounted for in full, and attributed to either the buyer or the seller clearly.

Breaches of Contract

It is important to note that the purchase option for the property can be removed is there are breaches of the rental contract. This is particularly true if the breaches are of an economic nature, i.e., if any rent payments are missed

If the renter chooses not to exercise their option to purchase the property within the agreed period then the right to purchase the property simply disappears. If the renter decides to go ahead and purchase the property, as outlined in the original contract, then it is considered to be consummated and the sales contract is automatically perfected. At this point the rent is no longer payable, and the property switches to the renter who is now the owner.

Benefits of Rent to Buy In Spain

One of the main benefits of a rent to buy contract is that, if you go on to purchase the property, a certain percentage of the rent that you have paid will be deducted from the agreed purchase price of the property. This, in effect, means that you are paying a reduced rent, or that your rent is helping you to pay for the deposit of your property, depending on your perspective.

Entering into a rent to buy contract is a complicated legal business, but it is one that could well prove to be a great business investment if you have always planned to move to Spain.

If you’re thinking of moving to Spain, particularly to Andalusia, then there’s no time like the present.  Right Casa are premier estate agents on the Costa Del Sol with thousands of properties for sale in Calahonda, houses for sale in La Cala, apartments to buy in Coin or Cabopino. If you’re ready to turn your dream of Spanish homeownership into a reality then why not get in touch with our local property experts, who are perfectly placed to help you find the Spanish home of your dreams.