Rent to Buy: what it is and how it works

Do you want to buy a house but cannot find a bank to put up the finance you need. Are you concerned about making a commitment to buy but not sure about the timing?

Italian law has a solution: the “Rent to Buy” scheme (affitto con riscatto). The scheme allows you to take immediate possession of your new home, try it and decide if you want to purchase. You will make a down payment on the price (typically 10%) and this together with the rent you pay is deducted from the price of the property if you exercise the option to purchase at the end of the agreed rental period (3 to 10 years).

In practice today you need to search for properties available on the market with the Rent to Buy scheme.  All you need to do is to advance a sum equal to 10% of the cost of the property, in order to have immediate possession of your new home and set – with today’s value – the final purchase price of the property. You will then start paying a monthly rent, possibly at above market value. At the end of the rental period, you can opt to give up possession and leave the property, or to purchase it at the pre-agreed price Both the amount paid as initial deposit as well as all rents paid, will be fully offset against the price of sale of the property. You may be able to arrange a discount if you purchase before the end of the rental period.

The market for properties available under the Rent to Buy scheme is not vast and, of course, limited to certain areas. You will never find an apartment in an attractive location under the scheme as the owner will certainly have no problem selling it normally with a cash payment. So you are looking at suburban and rural properties which are less marketable.

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