The latest report by the National Institute of Statistics (INE) on the home tenure regime by age, published in 2017, shows that only 26.5% of young people aged 16 to 29 own property. 52.2% was living in an apartment that was rented and 21.4% did not pay.
“80% of generation millennial —those born in the 80s and 90s of the last century — want to own a home. However, about 60% admit to having less than 20,000 euros to allocate to the purchase, making it difficult to access a traditional mortgage where, as a rule, 20% of the property’s value is claimed as an initial contribution”, History Guillermo Estévez, managing director of Spanish contractor Pryconsa’s lessor-to-buy firm Gradual Homes, explains.
José Manuel Cortes and Sofia Iturbe, co-founders of Libeen, another company specializing in this type of rental, said in line with the above “if a house had 5% entrance instead of 20%What banks should want is to increase the number of customers who can access homes”.
How much is the lease with option to buy?
Generally, in a leasing agreement, the lessee pay 5% of the cost at signing property acquisition. From there, it pays monthly rent for at least three years, which is used to pay 15% more, until it reaches 20%, the minimum threshold required by banks. Once this percentage is reached, the client will be able to request a mortgage loan.
“Lease with the right to buy makes access to hosting more flexible, allowing the tenant to enjoy the home that interests them, allocating part of their rent to the purchase, and with a significantly lower payment than usual on a mortgage payment. This completely changes the situation and opens up the possibilities in the market to many”, explains the spokesperson of Gradual Homes.
It is a model that has been used in Spain for years but has not been very successful. “It’s not a standardized model because The owner who sells wants the money instantly.. That’s why only companies do it”, justifying José Manuel Cortes and Sofia Iturbe. But it’s a common formula in countries like the United States, where companies like Home Partners, acquired by Blackstone in 2021, are facilitating access. house.
How profitable is this business for investors?
As both companies confirm, their profitability as investors sunflower seed anyone core +, i.e. the safest profile, always taking into account a fragmented residential area, that is, apartments with different locations, not in a single building. that means their annual benefit can vary between 3% and 6%, with a fixed income for the duration of the contract. “We’re talking about a very safe investment that practically has a social purpose,” the founders of Libeen state.
Gradual’s managing director believes this investment “fits very well with private and corporate investment plans” because of the return it provides. Libeen’s founders also believe this “There is a lot of appetite in the market” although they fear the instability that the new Housing Law will create, which will regulate the rental market.
José Manuel Torres explains that investing in a closed, transparent model with a beginning, an end and predefined conditions provides greater certainty and stability. “The tenant will own that home, so it is in their interest to protect and maintain it.. Maintenance costs are reduced, there is less risk of turnover and vacancy in the house, the transaction ends with the purchase of the interested party, so the purpose of the parties is to ensure that the tenant owns that house. Chosen by the tenant, so it’s really interesting and adapts to their needs.” “In short, it’s a very interesting investment model because it’s transparent for the parties,” adds Torres.
GradualWith the support of Arrienda from the Colomer family developer Pryconsa and Grupo Caser, confirms that it has already invested 5 million euros to buy homes and have 20 million people committed to closing 90 to 100 new operations. on his behalf libeen has the financial backing of Cusp Capital, the venture capital fund that spearheaded a €2.5 million investment round in April last year, and has already completed it. 10 million worth of purchases Have a waiting list of 100 people and more than 37,000 registered users on its platform. If they all signed a contract, that would mean an investment of 8 billion.
social component
Companies consulted also highlight the social component of offering option-to-purchase rentals. “We want to help young people. The market is broken and few people have access to the mortgage market. We want housing to be accessible and adapt our model to tenants,” says Sofía Iturbe. “We propose an investment with one component to help young people, make it easier for them to become homeowners and try to alleviate a related problem in Spain.” Director of Gradual Homes.