After half a life of living as a renter, Rubén and his partner were able to achieve their dream of ownership five years ago. Even though he had a good job as a computer consultant and had lived in Madrid for 26 years, it had been impossible for him to save more than an amount that was light years away from what any bank asked for as a down payment to be able to access a mortgage even then. At that moment an unexpected formula appeared thanks to which today he can enjoy his apartment while paying the same amount for the mortgage as the rent cost him then: rent with an option to buy.
"We wanted to buy, but the typical problem is always the entry. I knew about rent-to-purchase contracts, but I thought they were a bit like parents with the Three Wise Men, who exist but cannot be found. And the coincidence was that one day with my best friend he made an application to these people from Libeen," declares Rubén, who is from the Canary Islands and is now 44 years old.
Libeen is one of the few companies, along with others such as Gradual Homes or Inversiva, that offer this rental format in Spain, an alternative that is still very minority, but is on the rise in the face of the increasing difficulties for those who want to buy a home, especially among young people and families with stable incomes who do not have the prior savings necessary to face the down payment on a mortgage.
This format allows the client to choose a home that the company purchases and then rents it to them for several years. The user pays an initial down payment and a monthly rent, part of which is used to accumulate savings for the future purchase. At the end of the agreed period of three years, the client will be able to access a mortgage to purchase the property at the agreed price, discounting the accumulated amounts according to the conditions of the contract.
"We were looking at a house, a two-bedroom apartment. We spoke with Libeen and they told us that they were buying it and that we would continue renting it until the bank saw that you had already paid 20% and that you still had to pay 80%. Then, the appraisal was done and they gave me the mortgage," explains Rubén, who was paying a rent of 1,500 euros to Libeen until he exercised the purchase option and currently pays just over 900 for the house. mortgage. "All my friends who have bought a house are because their parents have given them money and I didn't have that possibility. I always say to my friends when I tell them, that if in 2000, when I arrived in Madrid, this had existed, then maybe I would have two houses now."
A good option with small print
Libeen presents itself as a company that helps young people and couples access the purchase of a home through a formula that is allowing them to grow exponentially in a very short time. Of the 200 users that the company has had this year, they plan to grow to 3,000 in the next year.
"Our clients are people who, since they cannot save for the down payment, end up living on rent because they cannot buy. It is like a vicious circle from which it is frankly difficult to get out," declares José Manuel Cartes, CEO of Libeen, who describes the average user as a couple of around 35 years old, with a net family income of 3,000 to 4,000 euros and the ability to contribute an average income of 19,000 euros. "We are prequalifying clients for the bank, which is also great for the bank. And we are improving the user's financial profile."
For Mónica Melle, professor of economics at the Complutense University of Madrid, renting with an option to buy can be a good option for people who do not have enough savings for a down payment, but do have stable income to be able to pay rent and eventually buy. However, Melle also points out that we must be attentive to the fine print, in which sometimes conditions appear that can be leonine for the client.
"Sometimes, for example, the price is not fixed and simply says 'market price', we also have to be careful that the duration of the contract after which the purchase option can be exercised is clear and then, of course, that it is also reflected that the amount that has been paid for rent is going to be discounted, that the home has no charges or how expenses or taxes are also going to be paid," explains Professor Melle. "There is also another risk for the tenant and that is that if they do not exercise the purchase option, the rental contract ends. There have been cases in which vulture funds have set a price so high that clients have not been able to opt for the purchase and have been left on the street."
A quick process
Lizeth Millán, a 36-year-old Colombian, has been one of the last clients to start her rent with option to buy with the company this year. He had been looking to buy a house for approximately a year, but his income was not enough to cover the down payment required by different banks, which asked for a lot of money. She and her partner, with whom she has two children, managed to save about 15,000 euros and, with this, they launched the project of getting their new house.
"We went to the bank and nothing, the bank, obviously, was asking for a lot of money, we couldn't do it yet. So I wrote to them (Libeen) and they made an appointment for me. We already had an apartment chosen, which we had searched for on a portal, we liked it a lot. They evaluated everything and told us that in principle it was viable and we just had to make the decision. We got into the project and it didn't take long at all, the truth is it was very fast. About two weeks everything was ready," explains Lizeth.
In just a few days the family moved to the new house in the town of Cullera, Valencia, and now they wait until the three-year period is up to return to the bank, this time, hoping to obtain the mortgage that will allow them to own their home. Lizeth admits that, without the rent-to-own formula, getting to this point would have taken them many more years.
"Who knows how long it would have taken us and the more time passes, the more housing goes up and the more time and money you have to save," declares the Colombian. "We are very happy, because it is an alternative way to get into our apartment and in addition to the fact that we are living in the house that we want to buy, in the apartment in which we want to live."
