Since 2016 it is also possible for individuals to buy a house through real estate leasing. This is an absolute novelty, which can create important conditions for those who want to buy the house and cannot or do not want to take out a mortgage.
However, there are limits to proceeding in this way, advantages and disadvantages, which must be considered overall before preferring leasing to other methods of financing the purchase of our future property.
How does the leasing work? What are the applicable deductions? How is the fee calculated? Is there always the maxi-installment? What are the requirements to access it?
We will talk about this and in general about everything you need to know about real estate leasing for the purchase of the house. Keep reading.
“Buying home leasing”: one of the alternatives to buy without a mortgage
Real estate leasing allows and favors the purchase of the first home. However, it is essential not to lose sight of some fundamental aspects! Let’s start!
The first aspect, perhaps the most interesting one for you too, is that leasing is a way of buying a home in capital smart city without a mortgage.
Tajarat is practically facing an incredible opportunity, especially for those who have seen the doors of the mortgage closed in their face and could therefore re-enter the world of credit simply by turning to this alternative type of access to property.
The ideal would certainly be, from an economic and planning point of view, to buy a house without accessing credit, or in cash, but this is not always possible and in these cases it becomes absolutely necessary to explore all the possibilities that we really have available, possibilities between which we must necessarily include real estate leasing.
A good time to buy a leased home, regardless of the mode
It should also be remembered to those approaching the property at this precise moment, that it has become very convenient to buy regardless of which access routes to the property we have chosen.
Regardless of whether it is a mortgage or a lease, the market at this very moment is characterized by some positive elements.
Buying a house with a lease or a mortgage could be quite advantageous during this period!
Real estate leasing rates: let’s see how they are!
In particular, the characteristics that we can highlight regarding real estate leasing rates are the following:
- very low interest rates: which can only be reflected in the rent due in the event of a leasing;
- prices not yet returned to pre-crisis levels: which means that it will be possible to buy at a reduced price compared to what was the market price only until a few years ago; the opportunities increase, even if the train is slowly beginning to pass;
The moment is therefore particularly propitious for anyone who was really looking for a good property, with leasing that can also allow those who cannot access a mortgage or a classic loan to make plans for the purchase of the house, which are medium or long term.
What is home leasing?
We can finally get to the heart of the question: what is home leasing? In what way can it be interesting for has chosen or had to choose not to rely on the mortgage? What are the tracks along which this specific offer runs? Let’s see it together. Lahore smart city is offering easy lease home contracts as well.
Housing leasing has certain generic characteristics, which we will present at the beginning and then go into detail point by point:
- the bank or another financial intermediary is concerned with buying the house indicated by the customer;
- subsequently the customer is placed in possession of the house;
- a fee is paid which, by way of modality, resembles that of the rent, for a given period of time;
- you can pay a maxi-initial installment, even if it is not always necessary;
- at the end of the agreement, the customer can decide to buy the property(with or without maxi-installment), he can also decide, if provided for by the agreement with maxi-installment or without maxi-installment; the customer will typically also have the right to request an extension of the lease;
The real estate leasing described was, at least until a few years ago, the exclusive prerogative of companies, today it is available (almost) to all individuals.
The differences between home leasing and other ways of buying
To better define the characteristics of real estate leasing, it will be necessary to compare this purchase method with the others. The differences between leasing and other purchasing methods are as follows:
- mortgage– in this way the bank makes a sum of money available to the customer, which will be used to purchase the property; you immediately become the owner of a property and the bank typically protects itself by registering a mortgage on the property, which it will exercise in the event that the repayment of the sum fails;
- the sale with retention of title– although to the less experienced it could appear as a similar type, with the retention of title the property automatically becomes the property of the customer, while with the leasing the right of redemption must be exercised;
- rent– although real estate leasing also pays a fee, in the case of leasing the rent is a sort of back payment for the “loan”, and is aimed, in the vast majority of cases, at the purchase, which obviously is not can tell for the lease;
- rent to buy– is a formula that is gaining momentum in the real estate market; in this case the difference lies in the fact that if the lease is a loan agreement, in the rent to buy we instead have a concession of the property in use and the possible possibility of buying, typically in much shorter time spans;
First home leasing: who can grant a real estate lease?
In order to understand how real estate leasing works, it will also be worth understanding who can grant this type of loan / contract. According to the law currently in force, there are three categories of subjects:
- direct sales networks: i.e. leasing companies that through their network of promoters propose the contract in question;
- banking groups;
- indirect networks, or agents in financial activities, credit brokers, as well as any banks affiliated with the agents;
Typical elements of the “private real estate leasing” contract
There are some elements necessary for the real estate leasing contract to be considered as such:
- the cost of the financed asset: it must necessarily be present;
- the duration of the contract
- the frequency of the fee– or how often we will have to pay the fee;
- the fee to be paid
- the lease rate
- the amount of the advance, or the value of the maximum initial installment
- the redemption value, or how much must be paid to complete the purchase
- the complete list of ancillary charges, typically the ancillary insurance costs
The right to suspend the lease
It should also be remembered that protections for the customer are incorporated in the leasing contract, which we will list below, also to understand, after the stipulation, how the relationship between the grantor and the applicant is structured.
There are cases in which the general discipline (which at least for these aspects cannot be overcome by contrary agreements on the leasing contract) provides for the right for the customer to suspend the real estate leasing contract. These suspensions can operate in the event that:
- when the employment relationship ceases– except in cases of consensual contractual termination, or in the case of retirement, whether early or not; moreover, the case in which the dismissal is for just cause, or for subjective reason, and even in the case of resignation is not valid;
- in the event that the relationship ends due to disputes, agency or commercial representation contracts, or even for relationships of a non-subordinate collaborative nature; also in this case the case in which the termination was consensual or the case in which the termination was for just cause does not apply.
- Furthermore, in the event of suspension of the leasing contract, this extends for the entire suspension period. During the suspension period, the interest on the residual debt does not operate in any way.
- Furthermore, the suspension can be requested without feesbeing applied for the practice and there is no provision for further guarantees to protect the bank or the entity that granted the leasing.
A contract that insists on the property: what happens in the event of the bankruptcy of the leasing company
Another important feature of the leasing contract is that it insists, in a broad sense, on the property. This means that in the event that the company that granted the lease should go bankrupt, the contract will continue normally and at the expiry the redemption can be made as if nothing had happened.
We will therefore not have to worry, even if the company that grants it to us is shaky, of what are the possible follow-ups of the corporate position.
The structure of the contract: the residential real estate leasing contract is a double contract
It must be remembered that according to the structure attributed by the 2016 stability law, residential real estate leasing is actually a double contract. In fact, there are:
- the leasing contract: with this contract the lessor undertakes to purchase the property indicated by the applicant and then to grant it to the user; with this contract all the terms we mentioned above are established, i.e. duration, fee, entrance fee, sum for the redemption;
- the sales contract: it is the second contract that is part of this complex shop; operates in compliance with the leasing contract and indicates the purchase methods to conclude the leasing contract.
Maintenance of the property
The situation that arises after the lease is taken out is structurally different from that of the mortgage. You are not yet an owner and therefore it is also worth trying to understand how the responsibility for maintenance works, since in the lease it is in some cases the responsibility of the owner.
As for the ordinary maintenance, just like in the lease contract, it is the user who has to face what are the maintenance costs.
As regards repairs and extraordinary maintenance, these are also the responsibility of the user, contrary to what happens in the lease contract. The owner, who until the sale will be the bank and not the user, has no responsibility of any kind.
Tax concessions for those who resort to leasing
A lot of legislative emphasis was placed on this new method of acquiring ownership of the property and for this reason the government in office at the time provided tax concessions for those who resort to this specific type of contract. The concessions will be operational until 31 December 2020, except for any renewals.
IRPEF concessions for leasing
First of all, there are important IRPEF concessions in favor of those who buy this specific type of property.
In the event that the property covered by the contract will be used as a main residence within one year of delivery, and also in the event that:
- the total income does not exceed 55,000 euros
- in the event that you do not have ownership of other properties
We have the following benefits. Let’s start with those under 35 years of age:
- 19%deduction of the fee and ancillary costs incurred, for a sum that does not exceed 8,000 euros on an annual basis
- 1l 19%deduction for the redemption price, which cannot in any case exceed € 20,000
For those over 35, on the other hand:
- the 19% deduction is appliedfor the fee and ancillary costs, for a maximum which in this case is 4,000 euros
- it also operates a 19% deductionfor the redemption cost, for a maximum of 10,000 euros.
Is it worth buying with real estate leasing?
Buying with real estate leasing can be an excellent solution for those looking for a purchase solution that does not include a mortgage. The costs are very similar, because where the interest rate would operate, leasing operates here, which provides for a fee that is obviously higher than the average repayment of the cost faced by the bank.
The requirements for accessing it, as we have seen in the course of our guide, can be different and therefore, especially for those who have seen a bank slam the doors in the face when applying for a mortgage, can certainly consider this option.
However, this does not mean that leasing is always the best solution: although this type of purchase has already conquered the market far and wide, for many it can be a less interesting and more expensive method.
In the event that you have the sums necessary for taking out a mortgage (typically the advance, which must be at least 20%), the invitation that our specialists make is to carefully consider the two options, because an equal conditions the mortgage continues to be often more advantageous.
If, on the other hand, there is no possibility of turning to a bank for a mortgage and leasing is the only possibility, we can say with reasonable certainty that the protections and reliefs in favor of the final buyer are such as to make this contract however advantageous compared to other similar solutions.
So let’s take it into due consideration, especially in these periods, periods during which buying a house is very advantageous.
We do not yet know how long the rates will be so low and the prices so advantageous: if you are in a position to buy, think seriously, because there will hardly be any opportunities like this on the market forever.
Real Estate Leasing Calculation
We close this article by highlighting the calculation of real estate leasing. Clearly, when you gather information on “proven real estate leasing” you also want to understand when you are going to pay.
We advise you to consult the real estate leasing calculators online, but to get a real idea you should go to several banks and ask for different “real estate leasing quotes” only in this way you will avoid unpleasant surprises and you will be able to make the calculations correctly.