What are the advantages and disadvantages of the real estate leasing?

Real estate leasing is a financial instrument used in the purchase of company headquarters or buildings. The economic agents can opt for the real estate leasing, but also the private individuals who want to buy a house already built. Real estate leasing for the construction of new buildings is rarely practiced.

Unlike mortgages for buying a house, for the real estate leasing, the applicant becomes the owner only at the end of the leasing contract. The property right turns towards the user after the payment of the residual value. The funding period is 7-12 years. The warranty of the leasing company is the ownership of the financed building, and it must be evaluated by a certified appraiser.

Sale and lease-back is a variant of the leasing contract which consists in the sale by a company (which will become a tenant / user) of a building (or more) to a financial institution (lessor / financier), followed by their immediate takeover in leasing. Thus, the user is also the supplier of the financed asset. In this way, the owner sells the building in the first phase to the leasing company then followed by its regaining through the leasing contract.

The real estate leasing has the following characteristics:

1. The offers of the real estate leasing are addressed, in general, to the companies;
2. By real estate leasing, already constructed buildings are financed; The amount financed is with 19% lower than the construction loans;
3. The guarantee of the leasing company is the ownership of the financed real estate;
4.  Until the end of the contract, the house is owned by the leasing company.

Compared to the mortgage credit for the purchase of the housing, for the real estate leasing one of the disadvantages is that the applicant becomes the owner until the end of the leasing contract. Meanwhile, the funding period can be up to a period of 10-12 years, while for the conventional construction loan the repayment period exceeds 30 years in the case of some banks. Another difference from the conventional real estate financing is determined by the type of transaction. Since this is done between the companies, the procedure provides both the VAT payment per transaction and the reverse taxation.