High real estate prices, rising construction costs, inflation or unaffordable mortgages, there are many reasons for the unaffordability of housing. More and more people are therefore looking for rental housing. Developers who are looking for ways to make their projects as attractive as possible at this time perceive the same problem. The new rent-to-own service, which originated in the United Kingdom in the 1950s, is slowly finding its place on the Czech market.
In short, the rent-to-own system means that a person interested in buying real estate first becomes a tenant with a subsequent right of pre-emption. The lease period can last from one year to five years, during which the client prepares to buy the property. In addition, the client pays part of the final amount as part of the monthly rent.
To buy or not to buy? Law vs. obligation
At the end of the lease period, it depends on the type of contract whether the interested party is obliged to buy the property or is given the right to refuse. A lease-purchase contract imposes on the client the obligation to buy the property after the end of the lease term, while a lease-option contract gives him the opportunity to decide whether to buy the property or not. In the latter case, the option fee may also be part of the agreement.
The reason is to protect the seller from uncertainty resulting from a possible withdrawal from the contract by the interested party, for whom this option is more advantageous. So far, the rent-to-own system is mainly used in less lucrative locations, where there is a higher risk that the property will remain without tenants or buyers. Companies, such as the British Wayhome or the American Home Partners of America, are increasingly appearing, which will buy the property on behalf of the client after meeting the specified conditions.
Construction of the first rent-to-own project in the Czech Republic already in the spring of 2023
The construction of the Letnian apartment building, the first development project in the Czech Republic using the rent-to-own system, will begin already in the first half of next year. The low-energy house will offer 144 apartments. There will also be front gardens, roof terraces, a shared garden and a children's playground. The 1.25 billion CZK project should be completed in two years.
According to BYX program guarantor Martin Kubišta for Forbes magazine, this is an ideal combination of ownership and rental housing. "The client will be a tenant in his own apartment, he can choose, modify and equip it. Although people still need a place to live, we think that at the moment, the interested party would not want or be able to buy an apartment. That's why we are postponing the purchase of an apartment to a time when it will be more convenient. But he can live right away," Kubišta explains.
CEO of Homeland.cz Jan Křiváček explains the arrival of the rent-to-own service as a response to the current market situation. Clients often do not have enough of their own resources to obtain a mortgage, or they are unable to obtain a mortgage for other reasons. "I do not expect this model to be the preferred variant of development in the Czech Republic in the long term," he concludes.
- Filip Kubus
- 21. 12. 2022
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