Rent to Buy Scheme in Cyprus: Myth or Reality?

Схема Rent to buy на Кипре: миф или реальность?
11 May 2022 Irina Starinskaia
4096

Before you buy a house, you can try to live there as a tenant, dispel all doubts and make sure that your decision is correct. 

Ιn the real estate market, there is an option when the buyer rents the property before buying it — Rent to buy, Rent to own, Lease to buy, Lease to own. There are many names, but the meaning is the same. Often, the scheme is also convenient for those people who are not suitable for buying with a mortgage.

The advantage for the buyer is that the money paid for rent does not fly into a "black hole", but acts as a deposit when buying this object.

The full price of housing is stipulated in the contract. On the other hand, a person may change their mind and refuse to buy. At the same time, the deposit is not refunded. The amount that the buyer must pay for the rental period is also fixed in the contract. The average rental period is from one year to five years. 

For the seller, the plus is that they are guaranteed to receive a deposit and have a deal with a reliable and interested buyer, who needs to study their future housing and the neighboring area.

If the real estate prices have risen sharply or, conversely, have fallen, the seller and the buyer have the right to revise the value of the property. 

The rent to buy scheme works best in a falling market or with illiquid and expensive objects. If there is a large number of buyers, it is not very relevant.

According to the Cyprus Land Department, the number of real estate transactions in 2021 increased by 32%, and the average transaction value rose by 26%. At the same time, Limassol was the leader in terms of the number of transactions, and Larnaca and Nicosia were the leaders in terms of the growth in the number of transactions relative to the previous year.

Thus, the real estate market is rapidly developing and even growing. It would seem that there is a place for any schemes and variations in the field of sales.

Nevertheless, according to real estate market experts, no more than 1% of the total number of sellers in Cyprus are ready to sell their properties under the Rent to buy scheme.

Approximately every 20th buyer in Cyprus is ready to use rent to buy scheme. But there would be a lot more of them if people knew about this option.

'Recently, a number of small Limassol developers have started providing Rent to buy services. But they call it something else — lending from the developer: the buyer can pay monthly rent and this money goes to pay off the total debt,' notes one of the brokers of the DOM agency.

The Rent or Sale offers that we often see in ads are similar to Rent to buy. But it is important not to confuse them, as here the owner still initially puts the object either for rent or for sale.

An experienced broker working in Larnaca and Protaras noted that most owners want something clear and concrete, either to rent or to sell. Only a small part is willing to wait until their client is ready to redeem. As a rule, they sell in order to purchase something in return or solve other issues with the help of this money. 

The island's mentality works here: what is the point of freezing your property for a year or more if there is no guarantee that the tenant will buy it out. Cypriots don't change their habits until everyone around them starts doing something differently. If you need money now, then they sell it now, not tomorrow. And those who do not need money in a hurry, rent out.

In general, there are enough buyers in the Cyprus real estate market today, so sellers choose not to wait, but to act. Τhe prices for commercial and residential real estate in the spring of 2022 were warmed up by the active relocation of companies from countries affected by the war.

The Rent to buy scheme is not very popular on the Island yet, but it does exist. You have to either directly discuss the possibility of such a transaction with the owners, or look for a broker who is ready to organize it all. In the meantime, there are few such in Cyprus.

Have you decided to buy an apartment or a house in Cyprus? Contact DOM! The website has a huge number of real estate properties —residential and commercial. Experienced agency specialists will be happy to help you make the right choice.
Source: DOM
Photos: DOM
Майя П
Майя П
29 November 2022 3:32
thanks to the author
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