If you plan to acquire a property in the short or medium term, a house for rent with option to buy may be your opportunity. Therefore, the team of nphp.com.pk has decided to tell you in this article everything you need to know about it. Continue reading!
A house for rent with the option to buy is a great opportunity for those who are considering acquiring a property in the short or medium term. Well, it is a type of lease whose contract is of the double or mixed type, since it includes a rental contract and a purchase contract. In this way, the tenant can live in the property as such for a certain period of time and then buy the property. By doing so, you will get a total or partial discount on the final price of the property for the rental fees.
Although this transaction can be very beneficial for both the owner and the tenant, we believe it is convenient for you to have the information that we will provide below. Well, the rental contract with the option to buy has some complexities that it will be better for you to know them before deciding to acquire a property in this way.
Advantages and disadvantages of acquiring a house for rent with the option to buy
Let’s start, then, by evaluating the advantages and disadvantages of acquiring a house for rent with the option to buy, for both the owner and the tenant.
Tenant or buyer
If, as a tenant, you are determined to acquire a property in the short or medium term, a house for rent with the option to buy will be a great opportunity.
In the first place, because this type of contract will allow you to save time and money for the purchase of the home since the amount of the rent will be deducted from the purchase price if you finally decide to acquire the property.
Second, rent-to-own makes it easier to get a mortgage loan. Well, banks positively value the fact that the applicant has already paid for a part of the property.
Third, tenants will be able to take advantage of the financial aid provided by the government for the purchase of a home. This will be the case as long as all the requirements established by the State are met.
But, in addition, the benefits lie in that the tenant will be able to know in depth the characteristics of the property, the neighborhood and the neighbors before deciding to buy. This is a great advantage since at the time of making the decision you will already know perfectly the advantages and disadvantages of the house you will buy.
However, there is also a disadvantage for the tenant in the acquisition of a house for rent to own. And it is that, generally, at the time of signing the contract, you must pay a significant amount of money for the right to acquire the property.
The biggest advantage to the homeowner is that you will be able to make a profit on your home much faster than if you just wanted to sell it. Since the average time of sale of a property in Pakistan is six months, while the rent with option to buy will provide economic income to the owner from the moment the contract is signed.
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However, in this case also there is a disadvantage: the price of the property will be established at the time of signing the contract. This means that, if prices rise, the property must retain the value established at the time of the start of the rental.
Even so, it is still a win-win option, since the tenant will be able to save money to buy his own home and the owner will be able to receive profits from the property much faster than if he only decided to sell it.
Contract for a house for rent with option to buy
The rental contract with the option to buy has some peculiarities that you should take into account when deciding to buy a house through this modality. As a starting point, we remind you of something that we have already mentioned: the contract for this type of transaction is double since it will include one for rent and another for purchase.
With regard to the rental contract, certain items must be compulsorily detailed:
- The time during which the lease will be made.
- The estimated term to exercise the right to purchase.
- The value of the monthly rent.
- The detail of who will be responsible for the community expenses and the reforms and repairs.
If you want to know more about the characteristics of the lease, you can follow the following link: Rental Agreement.
With regard to the sale contract, it must specify the will of the owner to sell the property to the tenant if he is interested in it. In addition, it should include:
- The price of the property.
- The percentage of the rental fees will be deducted from the sale price.
- The amount of money that the tenant must contribute at the time of signing the rental contract with the option to buy.
If you want to know more about sales contracts, you can follow this link: Sales contract.
Rights and obligations in a rental contract with the option to buy
When the contracts are related to a house for rent with the option to buy, there will be some rights and obligations, both for the tenant and for the owner, which must be respected by both parties.
Rights and obligations of the tenant
The tenant has the right to stay in the apartment for as long as the rental contract lasts, even if he decides not to make the purchase. In addition, you have the power to extend the lease, as long as the owner agrees.
On the other hand, the tenant has exclusivity to buy the home, provided that the established deadlines are respected. But, in addition, you do not have to wait for the end of the contract to exercise the right to purchase. In other words, the tenant will be able to acquire the property, even if the rental contract is still in force.
It should be added that, if there are delays in the payment of the rent, the option to purchase will be lost. At Capital Smart City all of these rules and agreements are always given to the renter/owners.
Rights and obligations of the owner
The first obligation of the owner is to respect the contractual conditions. This means that you will not be able to assign, rent or sell the property to third parties while the tenant’s right to purchase is in force. In addition, every owner should know that, if he decides to carry out this type of transaction, he will not be able to modify the sale price once it has been established in the contract, although the rent can be updated based on the CPI.
Third, the owner may register the contract in the Property Registry, provided that both parties agree. And, in addition, you must comply with all tax obligations related to the lease. The same will happen with the premium of the purchase option, if it exists.
Are you looking for a house for rent with option to buy? At Sky Marketing we have the solution
From us at Sky Marketing we want to present you this magnificent property located in the most exclusive area of Floret de Mar. It has a constructed area of four hundred and eighty-seven square meters, on a plot of seven hundred and fifty-nine. This means that it has a large garden with trees, swimming pool and barbecue.
With regard to the built area, it is distributed over two floors. In the first one you will find a spacious hall, five double bedrooms and direct access to the pool, the porch and the garden. The second floor, for its part, has a spacious fifty-square-meter living room with a fireplace and access to the terrace, a fully equipped American kitchen, two double bedrooms and two bathrooms.
But perhaps the most valuable thing about this property is that it is located in one of the best coves on the Costa Brava: Calla Canellas. So it has paradisiacal views and a unique natural environment. In addition, it was completely renovated four years ago and has innovative tools that improve its energy efficiency: solar panels and rainwater collection systems for irrigation. Fantastic, right?
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