BuySellBA
Administrator
What is real estate leasing?: the contract that allows a tenant to become an owner - Ambito Financiero
Source:
www.ambito.com
August 06, 2025
By José Luis Cieri
A financing solution for families with informal incomes that seeks to boost the housing supply in a credit-poor market.
Real estate leasing, a contract that begins as a rental and can culminate in the purchase of the property
Access to homeownership in Argentina is a constant challenge, marked by the lack of mortgage credit and the barriers faced by those without formal incomes. However, there is a legal tool that could change this reality: real estate leasing . This mechanism is not new, but its potential as an alternative to traditional buying and selling and simple renting has become increasingly relevant in the current economic climate. It is a contract that, based on a monthly payment, opens the door for a tenant to become an owner, offering a solution both for those who dream of owning a home and for owners of vacant properties seeking a return.
Real estate leasing acts as a bridge between leasing and purchase. It is a contract that begins as a rental, with the tenant making a periodic payment (called a rent), but at the end of the term, it gives them the irrevocable right to purchase the property. This tool is presented as a viable option for a segment of the market excluded from the credit system, and a way to boost the housing supply by offering profitability and legal security to owners. The spread of this legal concept, protected by the National Civil and Commercial Code, could mark a turning point in the housing market, encouraging more families to consider long-term ownership.
Loyarte explained that, despite its potential, the instrument is not yet widely used because the demand for bank loans is overwhelming. Furthermore, professionals in the sector, such as builders, developers, lawyers, and notaries, lack the necessary training on the subject.
He emphasized the importance of studying and disseminating the benefits of leasing, especially for the informal worker segment. For the auctioneer, one of the crucial advantages is that the transaction is "registrable," which gives it absolute legal security.
This instrument also offers significant flexibility. "Both the landlord and tenant have the option of assigning their rights in the contract," Loyarte explained. A tenant who has paid two years' rent and must move for work reasons can sell the amount contributed to another person to replace them, with the corresponding registration in the Property Registry. This flexibility, if incorporated into the contract with specific clauses, makes it a much more dynamic option than a traditional lease.
Enrique Abatti Jr. , a lawyer specializing in corporate law and a member of the Chamber of Property Owners of the Argentine Republic (CAPRA), explained that real estate leasing is, essentially, a property lease agreement with an irrevocable purchase option in favor of the borrower. "The periodic price is called a fee and corresponds in part to the average rental price plus a plus that represents the financial cost," he explained. This fee is added to the total price if the borrower exercises the purchase option.
Abatti Jr. explained that the transaction benefits both parties. It allows the borrower to access the property without a large down payment, while the lender has the peace of mind of not having to part with the property until the moment of purchase.
Bibiana Varela Guijarro , a real estate lawyer and CAPRA member, added that the requirements for this contract are the same as for a lease. The landlord, who is the owner, offers the property, and the borrower must demonstrate solvency and provide a deposit. The requirements are less strict than those for a mortgage, which requires the income to be in writing. In leasing, the requirements are similar to those for a rental contract, facilitating access for a segment of the population currently excluded from the formal system. The contract is executed by public deed and registered in the Property Registry, which provides security and protection to both parties.
A legal tool that could change the reality of the housing market and boost supply in a credit-poor market.
The risk for the borrower, however, is considerable. Varela Guijarro warned that it is essential to have a secure and consistent income. If the borrower falls behind on payments and defaults, the landlord can initiate eviction, and the tenant loses all accrued payments, which were considered part of the purchase price. This aspect makes leasing a double-edged sword, providing security for the landlord but demanding strict financial discipline from the borrower.
Regarding costs, Varela Guijarro clarified that the fee, being a financial contract, includes an interest component. The fee varies in contexts of high inflation, which makes leasing, like mortgage loans, unviable in uncontrolled inflationary environments. However, the lawyer emphasized that leasing eliminates the need for an initial down payment of 25% or 30% of the property's value, a significant entry barrier for many families.
Loyarte also addressed the projections. He explained that leasing would facilitate the sale of vacant properties, a common problem today. This option would allow an owner residing in another location to sell the property, receiving a regular payment and simplified management. Furthermore, this type of contract accommodates different payment methods and currencies, from pesos adjusted by indexes like the UVA (UVA currency) to foreign currencies.
The future of real estate leasing, according to Enrique Abatti Jr., will depend on the direction of the economy and, in particular, the decline in inflation. If the context is stable, the tool has the potential to become a common option. The lawyer concluded that leasing is a "dynamic contractual transaction that enables access to housing with fewer requirements than mortgage loans," providing greater legal security to the lender and protecting the borrower.
www.buysellba.com
Source:
¿Qué es el Leasing inmobiliario?: el contrato que permite a un inquilino convertirse en propietario
Una solución de financiación para familias con ingresos informales que busca dinamizar la oferta de viviendas en un mercado con falta de crédito.
www.ambito.com
August 06, 2025
By José Luis Cieri
A financing solution for families with informal incomes that seeks to boost the housing supply in a credit-poor market.
Real estate leasing, a contract that begins as a rental and can culminate in the purchase of the property
Access to homeownership in Argentina is a constant challenge, marked by the lack of mortgage credit and the barriers faced by those without formal incomes. However, there is a legal tool that could change this reality: real estate leasing . This mechanism is not new, but its potential as an alternative to traditional buying and selling and simple renting has become increasingly relevant in the current economic climate. It is a contract that, based on a monthly payment, opens the door for a tenant to become an owner, offering a solution both for those who dream of owning a home and for owners of vacant properties seeking a return.
Real estate leasing acts as a bridge between leasing and purchase. It is a contract that begins as a rental, with the tenant making a periodic payment (called a rent), but at the end of the term, it gives them the irrevocable right to purchase the property. This tool is presented as a viable option for a segment of the market excluded from the credit system, and a way to boost the housing supply by offering profitability and legal security to owners. The spread of this legal concept, protected by the National Civil and Commercial Code, could mark a turning point in the housing market, encouraging more families to consider long-term ownership.
The excluded segment and the opportunity that the market does not see
From the perspective of real estate companies, the growth of real estate leasing presents a huge business opportunity. Alberto Héctor Loyarte , a public auctioneer and real estate expert, explained it clearly: “The bank loan segment is limited to those with pay stubs or other verifiable income. Currently, we know that almost 60% of the country's economic activity is carried out illegally. This leaves a significant number of people with financial means who cannot prove it to a bank. This segment could be the one that considers real estate leasing a valid option.”Loyarte explained that, despite its potential, the instrument is not yet widely used because the demand for bank loans is overwhelming. Furthermore, professionals in the sector, such as builders, developers, lawyers, and notaries, lack the necessary training on the subject.
He emphasized the importance of studying and disseminating the benefits of leasing, especially for the informal worker segment. For the auctioneer, one of the crucial advantages is that the transaction is "registrable," which gives it absolute legal security.
This instrument also offers significant flexibility. "Both the landlord and tenant have the option of assigning their rights in the contract," Loyarte explained. A tenant who has paid two years' rent and must move for work reasons can sell the amount contributed to another person to replace them, with the corresponding registration in the Property Registry. This flexibility, if incorporated into the contract with specific clauses, makes it a much more dynamic option than a traditional lease.
A lease with an option to purchase
Enrique Abatti Jr. , a lawyer specializing in corporate law and a member of the Chamber of Property Owners of the Argentine Republic (CAPRA), explained that real estate leasing is, essentially, a property lease agreement with an irrevocable purchase option in favor of the borrower. "The periodic price is called a fee and corresponds in part to the average rental price plus a plus that represents the financial cost," he explained. This fee is added to the total price if the borrower exercises the purchase option.
Abatti Jr. explained that the transaction benefits both parties. It allows the borrower to access the property without a large down payment, while the lender has the peace of mind of not having to part with the property until the moment of purchase.
Bibiana Varela Guijarro , a real estate lawyer and CAPRA member, added that the requirements for this contract are the same as for a lease. The landlord, who is the owner, offers the property, and the borrower must demonstrate solvency and provide a deposit. The requirements are less strict than those for a mortgage, which requires the income to be in writing. In leasing, the requirements are similar to those for a rental contract, facilitating access for a segment of the population currently excluded from the formal system. The contract is executed by public deed and registered in the Property Registry, which provides security and protection to both parties.
Legal security and risks for the tenant
One of the greatest advantages for the owner, or lessor, is legal security. Varela Guijarro explained that, unlike a mortgage sale , the lessor does not relinquish the property until the borrower exercises the purchase option. If the borrower defaults, they lose all the fees paid, and the lessor can initiate eviction proceedings, which the law establishes as very rapid, within a period of no more than six months. This is a huge difference from a mortgage default, where foreclosure proceedings can take up to three years.
A legal tool that could change the reality of the housing market and boost supply in a credit-poor market.
The risk for the borrower, however, is considerable. Varela Guijarro warned that it is essential to have a secure and consistent income. If the borrower falls behind on payments and defaults, the landlord can initiate eviction, and the tenant loses all accrued payments, which were considered part of the purchase price. This aspect makes leasing a double-edged sword, providing security for the landlord but demanding strict financial discipline from the borrower.
Regarding costs, Varela Guijarro clarified that the fee, being a financial contract, includes an interest component. The fee varies in contexts of high inflation, which makes leasing, like mortgage loans, unviable in uncontrolled inflationary environments. However, the lawyer emphasized that leasing eliminates the need for an initial down payment of 25% or 30% of the property's value, a significant entry barrier for many families.
Projections and trends
Leasing is an attractive business for real estate developers, especially among wealthy buyers who lack the savings necessary for a down payment on a traditional purchase. Abatti Jr. said: "This operation opens the door to a new market niche and could boost housing construction."Loyarte also addressed the projections. He explained that leasing would facilitate the sale of vacant properties, a common problem today. This option would allow an owner residing in another location to sell the property, receiving a regular payment and simplified management. Furthermore, this type of contract accommodates different payment methods and currencies, from pesos adjusted by indexes like the UVA (UVA currency) to foreign currencies.
The future of real estate leasing, according to Enrique Abatti Jr., will depend on the direction of the economy and, in particular, the decline in inflation. If the context is stable, the tool has the potential to become a common option. The lawyer concluded that leasing is a "dynamic contractual transaction that enables access to housing with fewer requirements than mortgage loans," providing greater legal security to the lender and protecting the borrower.
www.buysellba.com
