The Leaseback—Continue to Use the Asset Sold Is Possible Part 2
Following by last posting, We have introduced the concept of “Leaseback” and a few of advantages of using this program in Japan. Today the negative side of the program as well as the procedure of from selling to leasing back will be introduced for your consideration. Hope the sharing of knowledge helps.
- The selling price is lower than the market price
One thing about the leaseback program is that the selling price is usually lower than the market price. therefore, it is not rare to see that there may be millions yen lost by selling the property in this way.
According to the real estate agent, there are many cases showing that 60%-80% of the market price is what’s to be expected when selling a house through leaseback.
You need to think it straight regarding for how much you would like to sell the house, because once the leaseback is opted in, there are potential loss happening. So you have to be clear of this point before you move forward to use the program.
- The rental tends to be high based on the selling price
The rental to pay through the leaseback program is about 10% of the selling price and this is higher than usual market price.
For example, if the selling price is 18 million yen, the yearly rental will be 1.8 million yen, divided by 12 months, the monthly rental is around 150,000 yen. In another word, if the house is sold at higher price, the rental will go higher accordingly. This could be a disadvantage of the program.
- It costs more for buying back than selling out
The previous owner is allowed to buy the house back from the current owner through the leaseback program, however, the disadvantage will be the buying price is higher than the selling price.
For example, if the selling price is 18 million yen, if you decide to buy the house back, the buying price may go up to 20 million yen.
If you have been aware very well of the above disadvantages of using the leaseback system, then you can proceed to sell the property.
- The Procedure of Selling ang Buying
When you proceed to the actual selling, there may be mistakes coming up depending on different real estate agents. The below regular procedure for your kind reference.
Interview and consultation with the professionals
General check on the case
Filed investigation and quotation
Lease agreement and sales contract
Payment and registration of change of ownership
Usually the below could be the reasons why people opt in to the leaseback program.
“worries about the senior life”
“suddenly fall sick and lose the income resources”
“be diagnosed as dementia and lose the ability to make sales contract”
“want to spend the savings on seniors’ home service”
“no enough money to pay the fixed asset tax and repairing fee”
Especially for the seniors, it could be a stress both mentally and physically to change the living environment, and it might even result in severe disorder of the physical system.
The leaseback program will be a good option for people who can stay in their original home while finding a way to get money, to insure they don’t fall into the awkward situation.
If you are interested in leaseback program and would like to know further information, please feel welcome to contact us. We have professional judicial scriveners on the team who have assisted with more than 1500 cases of real estate registrations a year, we are able to provide advice regarding the prices under the leaseback program from neutral point of view, in addition, we can also assist with the registration of the change of ownership and the checking of the related contract.
Besides, if you have questions about business loan, financial aid, subsidiary aid, taxation arrangement, sales of real estate, please feel free to contact, the interviews free of charges can be arranged at your best convenience.
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