If you do not have savings, this is one of the few alternatives to buy a house

The rental with the option to buy a home is an old acquaintance in Spain, although it has always been a minority formula.

Now it emerges as one of the few alternatives left for citizens who cannot buy or rent a house.

The method allows you to acquire a home little by little, without the need to have significant accumulated savings.

The Community of Madrid has recently announced its implementation and from the private sector some companies seek to promote it.

The rent with option to buy tries to untangle the two knots of the house.

One is the purchase: the Euribor exceeds 2.8%;

the financial effort climbed to 33.6% in the second quarter of the year, according to the Bank of Spain;

prices are getting higher, and for a large number of young people it is impossible to save 20% of the entrance fee because they would need to dedicate at least four years of their income, according to the Emancipation Observatory.

Rent isn't much better: The price rose 4% year-on-year in October, according to Fotocasa.

And young people must allocate an average of 79.2% of their salary to rent, when the advisable limit is 30%.

Rent with option to buy is a hybrid formula.

The

Rento, from the developer and construction company Pryconsa, launched in 2020 a seven-year lease with right to purchase model called Gradual Homes that, for the moment, only operates in Madrid.

The operation is simple: the client must contribute an initial amount of 5% of the price of the house —it is the contribution to the future purchase deposit contract and it is discounted from the price of the house—, plus the corresponding monthly rent.

You have up to seven years to save what you need to access a mortgage, although after three years of renting you could exercise your right to purchase.

If he backs out, he would lose the arras.

The initial payment of that 5% opens the possibility of buying to more applicants who are now out of the market and who do not have the 20% down payment that is required to access a mortgage.

“The difference is brutal.

With a flat of 200,000 euros you need 10,000 euros, compared to almost 60,000 euros for the traditional formula.

This totally changes the game”, says Guillermo Estévez, general director of Rento.

Most clients get the mortgage between the third and seventh year.

In addition, says Estévez, it allows us to think about the future.

“By requiring a lower down payment, with less savings you can go to a house with a higher value.

If you only have a saving of 20,000 euros, it would give you a house of 400,000″.

The cost of the rent that the tenant-buyer is going to pay is neither higher nor lower than the market price and is reviewed annually according to the CPI, says Estévez.

Most are between 700 and 1,200 euros per month.

There is an option to not lose all the rent paid during those years: optionally you can contribute an extra 2% and obtain a discount of 30% of the rent paid.

The client signs a future sale contract from the beginning, in which the important issues are fixed: rent, discounts, contributions and the final price of the apartment (to which an annual revaluation of 3.61% is applied on average) .

The Rento company does not have a catalog of homes to choose from, but it is the client who presents the house that he likes, whether second-hand or new.

If it fits the criteria, an institutional investor buys it and becomes the lessor and future seller.

This investor is the one who is responsible for the purchase and sale expenses, the payment of the IBI and the community of neighbors.

“It is not a closed showcase;

This is the difference with respect to past attempts and other current ones to start renting with the option to buy because they limited the options a lot”, affirms Estévez.

However, the Rento model is also subject to certain conditions.

Currently, the company only operates with flats, penthouses and duplexes with an approximate value of between 100,000 and 400,000 euros located in and around Madrid, although it intends to expand to other cities.

It does not accept flats located on the ground floor, premises converted into housing, third and fourth floors without elevator, subsidized housing and off-plan new construction.

Institutional investors are not interested in keeping this type of house if the purchase does not materialize in the end.

In addition, the tenant needs to have a minimum of 1,500 euros per month of declarable income.

In these two years of activity, with a pandemic involved, they have closed around 10 operations, they analyze 50 every month, they have two institutional investors, whose names they do not want to make public, and they have raised 20 million euros.

At the moment there are few operations, although the general manager reports the interest in this model: "More than 20,000 people enter our website every month and more than 1,600 register."

Although he acknowledges that there are many who fall for a bad financial analysis, because the house does not fit the investor's criteria...

It is difficult for rent-to-purchase to spread in the new-build market, where sales are closing at a very good pace.

“I don't think that in general it is a path to be followed by listed and unlisted promoters.

The sector is focused, for the most part, on sale and we are seeing how

is also increasing its market share, but always designed so that the property is alien to the developer," says Daniel Cuervo, vice president of APCEspain.

Between individuals

Another thing is the second hand.

In the market between individuals the formula is more present.

At the Alfa Inmobiliaria agency, 5% of its portfolio offers this modality.

"It is an alternative to buying a home without savings and it gives the future buyer peace of mind that, if the plans do not finally go as expected, their commitment will be limited to interrupting the rental contract," says Jesús Duque, vice president of the network.

On the Idealista portal there are 5,719 ads and on Fotocasa, 269. Renting with the option to buy between individuals allows the parties to freely agree on the conditions, although it is important to clearly state the entire procedure in the contract.

It is necessary to detail the time that the tenant can stay in the house, the period in which he can exercise his right to purchase, the monthly amount of rent, who is responsible for the payment of community expenses or possible reforms...

As for the Administration, the Community of Madrid has announced a rental plan with the option to buy for people under 35 years of age.

The goal is for them to have an affordable lease for 10 years and, after that period, to be able to purchase the house discounting the amounts already paid monthly.

In this way, tenants will capitalize the rent they have paid.

On the community website there is still no promotion that offers this formula.