Real estate rental options are already popular in the United States and other overseas markets. New UK companies such as 1stLOCation, managed by The Lease Option Company and Property Lease-Option UK, are now offering them to attract both hardened buyers and renters looking for reliable tenants. Lease or leasing options contracts, commonly referred to as lease-leasing agreements at Own, are used interchangeably, although they differ considerably. These agreements allow a potential buyer to occupy the seller`s property for a certain period of time prior to the closing of the sale. This agreement can help one or both parties achieve its objectives and needs with respect to the transaction and its specific circumstances. In some cases, these agreements may even allow a buyer to build up some equity in the home. At the end of the rental period, the tenant/buyer has the opportunity to purchase the house. The lump sum and rental credit from the original deposit will only be released to the buyer in the form of a down payment on the house, if the tenant/buyer decides to buy it. The tenant/buyer is responsible for guaranteeing the mortgage required to complete the purchase of the house. A rental option is different from a lease agreement by the fact that a lease purchase binds both parties to the sale, while the buyer has the option of a rental option, but not the seller. The money in the option is not refundable. No one else can purchase the property unless the buyer is late and the buyer generally cannot give up the lease without the seller`s consent. Buyers are often responsible for the maintenance of the property and the payment of all expenses related to its maintenance over the life, including taxes and insurance, and are contractually required to purchase the property.
How does it work? In the case of a rental agreement, a tenant has the option to purchase a property at the end of a certain rental period, usually three to six years, at an agreed price. The tenant buyer pays a consideration in advance, but at 2-3% of the market value of the property, it is best to immediately establish a full down payment of 5-20%.