Thread: Rent to buy/mortgage transfer accomodation wanted in Tenerife

I have seen a couple of rent to buy schemes. Unfortunately many of them involve a sizeable deposit - as much as 20,000€ in one case and also enhanced rental. One I looked at was 1200€ per months instead of 850€.
I would avoid these at all costs. There is no reason whatsoever to be expected to put down, and essentially risk, that kind of money.
There is a thread on here discussing the pro´s and cons of rent to buy.

Ensure that you have a long enough contract that at the end of it you will definitely have enough to put down as a deposit.

If you are taking over a mortgage - a process called subrogacion - you will still be subject to the same due diligence as anyone else applying for a mortgage so I wouldn't necessarily see this as a solution.

Worst case scenario, get 12 months pay slips behind you and then apply for a mortgage - if you will have a deposit by then that is.

Well the rent-to-buys you have seen so far dont sound too bad at all and depending on the term, are probably worth a look. I know a couple of people who are interested in these so feel free to pm me the details of any good ones and I´ll pass them on!

On the subrogacion front, the way a bank should view it - at the bare minimum - is to decide whether you are a better risk or a worse risk than the current mortgage holder. So far as deciding whether you can afford the payments - which is essentially what all banks do for standard purchase mortgages.

I mainly see subrogacion occurring in the new build sector where purchasers have the option to take over the developers mortgage. I see plenty of clients rejected by the developers bank so I doubt it is as easy at the moment as you have been informed.

One situation where it may be beneficial to subrogate would be where a bank has a large number of mortgages outstanding on a new build and there is a high risk of the developer not being able to keep up the mortgage payments on them all. In this case, if a bank is concerned enough about the developer becoming insolvent then they may give 100% mortgages to buyers as they would rather have the total outstanding balance spread over 100 different clients than with one risky developer.

This is happening quite a bit in mainland Spain but I have not aware of it happening in Tenerife yet. It doesn't make it much easier to qualify for the mortgage - the bank still wants to ensure you meet certain criteria and are bound by the Bank of Spain to do so, but they will certainly be more flexible with their under-writing.

I also believe (though I may be wrong), that if you are renting & the owner wants to sell, then you are given the first option to buy?

Depends on the type/length of rental contract you have but yes - you do get first option as the tenant if they want to sell it.
They also cannot kick you out if they sell to someone else - again, contract dependent.

Something for owners to look out for if they are considering a rent to buy option - you are giving someone an indefinite rental contract. if they then decide they dont want to buy it, it is very difficult to then sell it to someone else if your tenant refuses to leave.

Originally Posted by C.I.M

Depends on the type/length of rental contract you have but yes - you do get first option as the tenant if they want to sell it.
They also cannot kick you out if they sell to someone else - again, contract dependent.

Something for owners to look out for if they are considering a rent to buy option - you are giving someone an indefinite rental contract. if they then decide they dont want to buy it, it is very difficult to then sell it to someone else if your tenant refuses to leave.

No C.I.M ... a well drafted contract will state they must leave the premises if they do not exercise their option to buy, which will have a definite time limit.

In my recent experience, there has been a huge increase in people looking for Rent to Buy - especially from people from the mainland.

Originally Posted by doreen

No C.I.M ... a well drafted contract will state they must leave the premises if they do not exercise their option to buy, which will have a definite time limit.

In my recent experience, there has been a huge increase in people looking for Rent to Buy - especially from people from the mainland.

I am pretty sure I read that they have the right to stay for 5 years whether they buy it or not, regardless of what is in the contract. So if they decide they are definitely not going to buy it - they can still sit there for 5 years and if the owner wants to sell it - it is sold with the tenant.

I have read this in Spanish thought so it might be 5 years for a specific rent-to-buy program or it might be a tenancy law.

I´ll find the website and you can have a read.

A good reason to pay for a lawyer to put the contract together rather than trying to do it yourself....

Originally Posted by C.I.M

A good reason to pay for a lawyer to put the contract together rather than trying to do it yourself....

Absolutely !! Normally, tenants do have 5 year rights despite people trying to get around it with 11 month contracts etc ... but I presume when it is for a specific purpose such as purchase, it would be looked on differently in the courts.

In normal tenancies, you do hear of people paying their tenants to leave when they have a buyer. In an option to buy, I guess that is why there is often a large deposit requested - sometimes up to 20,000€, so I am sure that keeps people on track