Property leasing

Property leasing is a financial instrument that makes it possible to buy a flat through a long-term rental with a further purchase.

In many countries, banks and developers offer individuals the option of «leasing».

In this case, the bank buys the property (e.g. a flat) from the developer and rents it out to the lessee. The lessee uses the flat, pays the bank a monthly fee and thus gradually buys it back from the financial institution. The property can only be transferred into ownership after full payment. Leasing is usually offered for a period of 20 years with the possibility for early repayment.

Unlike a loan, «leasing» does not require a large number of guarantors and an impressive list of documents. In addition, leasing has more liberal conditions for entrepreneurs, «freelancers», «business travellers» and those who earn income abroad. The interest rate on leasing contracts is almost the same as on loans.

Note that a person who lives in a leased flat cannot sell or gift the flat. However, he or she can register at the address of the leased flat and live there with his or her family. Moreover, he may rent out the flat on a long-term basis in agreement with the bank. Utility bills in such a flat will be charged at the same rates as for individuals.

If we are talking about «leaseback», then the person who owns the property can sell the asset to the bank and then lease it back from them. That is, the bank buys the flat from the applicant and leases it back to him at one point in time. As a result, the person receives the necessary funds and continues to live in their flat, paying the bank the necessary amount every month.

Real estate leasing is one of the ways to buy a flat, a holiday home or a house with the help of a banking institution.

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