Rent to Buy Options

Client
Commercial / Private
Date
December 11, 2020
Services
Rent to Buy Options

In recent times, securing finance from main stream banks and finance houses is proving extremely difficult, due to the new policies and procedures which banks now employ as part of their due diligence and assessment processes. Many properties are subject to debt resolution/settlement processes and therefore specialist providers are required to secure the assets involved, as main street lenders are not interested in such cases.

Today Markets has identified this niche market and designed a specific product that can allow clients to secure a property for commercial or residential “Buy To Let” (BTL) purposes, through its “Rent to Buy” Option Scheme. This option has already helped clients to secure properties, which they could not secure financing on through mainstream channels, and allows them to retain an interest in the property, with options to repurchases in the future, subject to agreed parameters.

A summary of what the “Rent to Buy” Option will provide for the client is outlined as follows:

  • A Call Option Agreement to purchase the property asset for an agreed consideration, including agreed performance objectives and obligations by way of legal terms and conditions.
  • To become the immediate possessor of a property through a legal lease agreement, in conjunction and alignment with the Call Option Agreement mentioned above, for an agreed weekly or monthly fixed consideration.
  • To secure a fixed property purchase price now, negating future property valuation increases
  • The agreements are assignable subject to the agreed terms and conditions and agreement by Equity Square. Equity square cannot unreasonable object to the assignment of agreements entered into as long as these assignments do not undermine Equity Square’s legal entitlements.
  • To property can be sub-let subject to normal legal requirements under the primary lease in place on the property.
  • Dependent on each entities specific tax status and classification, there can be (subject to entities own independent tax advisors advices) tax efficiencies and offsets available against rent paid under the terms of commercial leases.
  • Early exits from the legal arrangements involved are available but can be subject to early encashment penalties as per the terms and conditions of the legal contracts and agreements entered into.

Through the mechanisms involved, clients secure options to purchase the property at agreed rates and timescales through a “rent to buy” process.

The product can be utilized for all commercial and BTL properties, and in some cases can be utilized for Holiday Home units (subject to clarification).

These “Rent to Buy” options can be over a 3 to 15 year period normally, but usually for a minimum period of 5 years up to a maximum period of 20 years, as there can be early exit penalties involved, where applicable.

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