One way to beat the credit crunch in Lanzarote if you are buying a property is to exploit the increasing number of rent to buy options being increasingly offered by developers on the island. Rather than make an outright purchase you rent your home from the developers, with an option to buy at a later stage.
Obviously, depending on who you deal with, the terms vary, but the principle is quite simple. You enter into a contract with the developer to rent your new home for a fixed period of time and pay them a deposit at this stage, much as you would with any long-term rental agreement in Lanzarote. The difference is that the contract has a fixed period during which you have the option to purchase the house. All the rent you have paid, between the date the contract is signed and the date of purchase, is deducted from the asking price of the house.
The advantages are:
- Mortgages in Lanzarote are difficult to get at the moment
- When you come to buy you already have some ‘equity’ in the property making obtaining a mortgage easier
- Effectively you are getting a ‘free mortgage’ for the period of the agreement
- There is no need to pay a sizeable deposit to buy your property
- If your funds are currently in sterling the currency may well recover in the meantime
- If you are moving to Lanzarote, you are not completely committed – we always recommend renting before you buy a property just in case things don’t go to plan in your early days here
- By the time you come to buy the property market in Lanzarote may be more buoyant than it is at the moment
- Unlike long term rental the rent paid is being deducted from a possible future investment – if you were going to rent long term anyway, why not have the option?
Of course, with any contract, we recommend you seek appropriate legal advice.