The rent-to-own concept is turning dreams of Czech property ownership into reality

Just imagine: you’re eager to get on the housing ladder, you find the perfect home and prepare yourself for an exciting new life chapter, but the bank refuses to give you a mortgage loan. Despite being confident in your financial ability to pay loan installments, rules about mortgage eligibility have snatched away your dream.

Sadly, this situation is not rare. Especially for expats in Czechia, best laid plans for taking out a mortgage may be ruined if you don’t have the right residency or tax documentation. Until now, if the banks refused to give you a loan, there was typically no alternative solution, especially in the context of astronomically high house prices in Prague and other Czech cities.

A new product on the Czech housing market, however, has been created based on the belief that people with solid financial prospects should not be left high and dry if the banks turn them down. Backed by Broker Trust, the largest housing mortgage loan mediator in the country, MOOY brings the “rent-to-own” model, already popular in Anglosphere countries, to Czechia, allowing expats to move into their dream home and ultimately to make it their own.

MOOY provides two separate products. The first of these, BUDE MOOY, is for people who want to buy a home but can’t get a loan.

“BUDE MOOY resolves the issue faced by clients who want to buy property but face a lack of financing,” explains Petr Klimša, Chief Operating Officer at MOOY. “It’s highly relevant for expats. The most common situation faced by these clients is that they applied for a loan but  their application was rejected. Our solution is that we buy the property on their behalf.”

“They can immediately move in, pay us a monthly rent, and there’s a written contract which clearly specifies the conditions under which they can at any time buy the property from us. The fixed future price increases yearly, but with a market situation in which property price increases are expected, the fixed price model can be a win for clients in the long-term. Once they have solved whatever issue stopped them from getting a mortgage before, they can go back to the bank, and once they have the loan or gain the money needed in another way, they can buy the flat or house from us,” Petr adds.

Buying a home is an area of life in which expats can face significant complications. According to Petr, typical situations leading banks to reject expat clients include lacking required residency permits, starting a new job, or going self-employed and lacking a relevant financial history. MOOY clients are often confident that they will be eligible for a loan in the not-too-distant future, once they have obtained the required residency or financial evidence.

After a 10-minute initial application process, MOOY assesses potential clients, taking a more flexible approach than banks. While clients “can’t have serious financial troubles,” MOOY is interested in gaining a fuller picture of their prospects.

“We can look at things differently from a bank,” Petr explains. “For example, you may be an IT specialist at the beginning of your career with a relatively low salary, but a high likelihood of a rapid increase in earnings. We might look at you and say: ‘Your salary isn’t enough for the bank right now, but in two years, we think it will be.’”

Most clients aim to buy their house from MOOY after two years, with the majority having already earmarked their dream home by the time they approach the company. Properties must be in a good condition without requiring major reconstruction, while monthly payments can be set higher or lower according to clients’ cash flow requirements. Similarly to a mortgage loan, you have to put down a cash deposit, but not for 20 percent of the property value as the banks require.

“We require 10-15 percent of the property value up front. If a client decides they don’t want to live in that property after using our rent-to-own product, a fee is subtracted from their deposit. This is transparent from the very beginning, with no surprises for clients,” says Petr.

MOOY’s other product, JE MOOY, approaches property financing from the opposite direction, allowing clients who already own property to exchange it for the cash they need to open up exciting opportunities or help them out of a jam.

“JE MOOY is also popular with foreigners. It’s for people who need to obtain money from their property ownership for a particular purpose, such as to buy another property, to inject money into their business, or to pay off debts,” Petr describes.

According to Petr, JE MOOY applications respond to an urgent need. “For these clients, a problem needs to be solved; they need money right now but the bank can’t help.” Other situations in which JE MOOY provides an answer include inheritance disputes, a divorce in which a mortgage issue must be resolved, or inability to pay regular mortgage installments.

Such clients typically buy their property back from us in future under clearly stated contractual conditions once they are back in a good financial situation. In some cases, clients sell their property in cooperation with us, gaining another financial windfall. 

With the average Czech household paying a record high percentage of their total income on mortgage installments after precipitous interest rate hikes, this is a moment of historic unaffordability in Czech housing.

“Property prices have rapidly increased but wages haven’t grown at the same rate,” says Petr. “As the schism between those two factors has widened, many people are struggling to buy their own property. Yet people in Czechia are naturally inclined to be home-owners; they have a strong feeling that they should own the place in which they live.”

Looking ahead, Petr notes that with interest rates decreasing and wages rising, taking out a mortgage may soon become more affordable. On the other hand, after a year of stagnation, house prices will very probably start to grow again, making the BUDE MOOY product even more attractive right now.  

In these unpredictable times, MOOY’s offer of flexibility and transparency brings hope to those rejected by banks. By helping clients become property owners, its rent-to-buy concept is the ideal antidote for those otherwise unable to purchase their dream home.