SALE AND RENT BACK WARNING!
Nearly TWO YEARS AGO the Financial Services Authority (FSA) introduced regulation of the sale and rent back market.
This is where you sell your home to an investor and rent it back, allowing you to stay in your home.
In the opinion of many, the FSA used a sledgehammer to crack a nut thereby forcing many legitimate sale and rent back operators out of business. If the intention was to regulate advice and make sale and rent back schemes safe for sellers then they have failed miserably.
Only in February this year, some 18 months after the regulation came into place, Which? Magazine did a secret test of companies offering sale and rent back purchases.
Most of them were unqualified, unregulated and acting illegally.
Last week a seller contacted me who needed a fast sale in order to repay some serious debts that were secured against his home.
He told me that a ‘local sell and rent back guy’ had offered him 70% of market value for his home in return for renting it back to him.
Often the sellers do not know that this activity is illegal and punishable by heavy fines and/or imprisonment. In this case the seller told me that he knew the SARB operator was not regulated, the buyer had admitted that he was unregulated yet still offered to sell and rent back the house.
This seller had been prepared to accept the sale and rent back of his family home. If he had accepted this transaction he could have lost his home and any equity he had in it forever. I did explain to the seller that it was illegal and that he should report the investor, but he may have decided to go ahead with the sale. If so, it can only end in tears!
If you are approached by someone who offers to buy your home and rent it back to you, you must make sure that the buyer is FSA licensed.
If the buyer is not FSA licensed please report the person or the company to the FSA. Doing so may help someone else from being caught by sale and rent back scam.
Unfortunately, the sledgehammer approach by the FSA meant it was incredibly expensive for firms to apply to be licensed. The effect of this has been felt on the very people who were supposed to be helped by the legislation and now sale and rent back is an option that is very hard to achieve for sellers.
If you need to sell to clear debts and move on with your life then there are other options that can give you the price you need in order to sell your house or flat.
You can see some of my options that can help you here
