A division of Ronan Property Services
Lease Options Explained
The Benefits of Lease Option for the vendor
There are times when selling a property for cash is neither preferable nor possible. This is particularly the case when a property has little or no equity in it. If a seller needs to stop paying the mortgage and is in the position to move on without selling the property at below its full market value, then we can help by using an instrument called a lease option.
Although relatively new in the UK, lease options have been used in the USA and Australia for over 30 years.
The Lease Option: A lease option is a combination or a “lease” and an “option”.
The lease: allows our company or one of our associates, to rent the vendors property and to become responsible for the vendors mortgage payments.
The vendor can move out of the property without any further burden of mortgage payments. In return, the vendor grants us the right but not the obligation to purchase the property at a specific price in the future.
The Option: This is the option part of the agreement. The sale price that we agree upon is usually fairly close to today’s full market price and the period to exercise the option is usually between two to five years.
During this period, apart from paying the vendor’s mortgage, we or our associate become responsible for the full maintenance of the property as if we own it already. We will carefully select and screen a potential tenant/buyer who wishes to buy the property in the future and carefully manage it as though it was already our ownership.
However, if we choose not to exercise the option to buy the property at the end of the period, the property would just be returned to the vendor, in as good a condition that it was handed over in, but most likely with improvements made to it. By that time, the vendor would have benefited from a long period of not paying the mortgage and the property may have experienced significant capital growth. However, it is worth noting that more than 95 percent of options are exercised by us or our associates.
Ideal Situations: A lease option would suit the following situations:
No Fee’s: This service is free if you agree to use our nominated solicitor to represent you. He is a specialist in the filed of lease option agreements. The process takes approximately 28 days to complete.
Due to the flexible nature of a lease option, it is possible to structure it so that it can completely adapt to your particular set of circumstances.
The lease option prompts the tenants in taking care of the property, as they have the intention of buying it in the future.
The finding of buyers for a proposed lease option would demand a considerable amount of time and investment on the part of the vendors and maybe beyond their experience.
We have built up a network of registered associates throughout the UK who will lease and buy your property using one of our established schemes.
Lease options benefit the vendor and
the buyer in an equal manner. They help in creating the finance required
for the purchase of a new home.
Lease options are a good source of purchasing homes for first time buyers who have not managed to save the deposit for a normal mortgage.
Lease options are also great
marketing tools for the sellers of properties to find good buyers. It
can be adapted to be used in most countries but not in countries that
restrict sub letting.
Your home is your most valuable asset. Sell it as an asset, before it slowly becomes a liability. We can help you to get on with your life. Apply today while this is fresh in your mind!
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