The Rent to Buy is a new contract that offers to enjoy a property for a determinate period of time and then decide to buy it or not; it is the new type of negotiations governed by our legal system to give more flexibility to the tools available for private individuals.
Great Estate is about to close the first negotiations with national and international clients who asked about this new opportunity.
In fact, in last six months, the clients from Central Europe and the United States have shown the wish to “test” the villa or farmhouse they were interested in, and we, as always, tried to satisfy their desire.
By Decree Law no. 133 of 2014, Art. 23, converted into law 11/11/2014 n. 164 Italian legislation has introduced and regulated for the first time the “Rent to Buy“, a new type of contract inserted to the contracts environment in a function of the subsequent sale of properties.
This figure, already partially widespread in practice with similar characteristics, consents to endorse the final effects of a possible property purchase, allowing the potential buyer (the renter) to obtain the immediate availability of home and to charge a fee of the consideration of the future and eventual purchase, the monthly fee for the use of the property. On the other hand, the Rent to Buy allows the seller (the grantor) to receive income from the property and to find a buyer.
In fact, it is a single-figure contract in which the lease is added, in favour of the renter, the right of the property purchase to be exercised within a time period established under the contract (in any case, no later than ten years from the registration of that contract).
The regulation refers in many aspects to that one of usufruct: as for the apportionment of expenses, the ordinary shares are charged to the renter, and extraordinary are charged to the owner; there is a duty of the renter to report any acts of usurpation or insults to the reasons of the party lessor (the owner); the cost of any disputes should be distributed in proportion to the respective interests of the parties.
The more important aspect is the right of purchase that is granted to the renter: he has the possibility to choose within a certain period, agreed between the parties, whether to buy the property where he is living or not.
In case he opts for the purchase, after having communicated about this intention to the owner, he has the advantage of reduction the sale price, as a percentage of the monthly dividend payments has been conventionally allocated on sale account.
If he prefers not to buy, the renter must return the property, having to be undergone the loss of a part of the fee charged to the share consideration. This percentage will correspond that one previously agreed in the contract.
The benefits for the renter as well as for the future and potential buyer are given, firstly, with the registration of the Rent to Buy contract in accordance with the art. 2645 bis of the Civil Code (described in the preliminary contract for the transfer of ownership or the establishment, modification of other indicated real rights, the effectiveness of which, however, extends in this case for a maximum period of ten years), with all the consequences in enforceability order act against third parties.
Secondly, there is a special privilege for the buyer, in a case when he decides to purchase the real estate object, according to art. 2775 bis civil code. This will come to an end until the effects of the registration of the contract. This privilege, however, will not be enforceable against those creditors secured by a mortgage related to loans granted in favour of the same subject for the purchase of the property as well as in the presence of former mortgages ex art. 2825 bis c.c.
The Rent to Buy contract with the increasing difficulty in accessing to credit, can allow the tenant to get the immediate availability of a property, in exchange for monthly fee payment that also affected a part of the price of any subsequent sale, without obligation of use (at least for the first years of the contract onwards) of any type of funding.
Thus, the prospective purchaser, in case when he chooses the right of purchase, at the time of payment of the balance of the purchase price, will have facilitated access to credit, being able to prove his financial viability through the timely monthly fees payment in favour of grantor, which probably will not be different a lot, in terms of the amount, from the mortgage payments to be concluded.
Anyway, Great Estate, thanks to the already closed negotiations and negotiations which are in the process, had an opportunity to notice that the Rent to Buy is able to meet also another requirement: that one of “testing” the house, to see if it can be yours and then decide whether to buy it or not, by fixing the price in advance.
It is another form of negotiations available today for private individuals in order to meet better their needs.
One more advantage for the property owners should be mentioned: it is always more difficult to sell a house in winter than in warm periods; with the Rent to Buy they can rent the property and receive an income in cold periods too.
According to our experience, it works not only for real estate with medium price but also for big villas and farmhouses: for instance, at this moment we are managing a negotiation of a property in Todi, in the province of Perugia, with a value of more than one million euro!