What is Sell and Rent Back?
Apr 5th, 2008 | By admin | Category: Negative Equity News, Repossession, Sack Your Estate Agent, Sell and rent back, possession orderSell and Rent Back STOP PRESS:
Please note From July 1st 2009 I will no longer be able to advise on dangers of sell and rent back due to new Government legislation. I no longer offer any kind of rent back solution. If you wish to sell and rent back you must find an FSA regulated company. Good luck finding one of those as the FSA made it so hard for companies to be regulated that as of July 1st 2010 there are only TWO companies that bothered to spend the hundreds of thousands of pounds needed to comply with FSA rules.
What is Sell and Rent Back?
Sell and rent back is where you sell your home to a property investor and rent it back again.
How does this benefit me?
- You get to stay in your home
- Your children stay in school
- Nobody needs to know that you have sold
- You don’t need a HIPS pack
- You don’t need to spend thousands decorating before selling
- You get to rent back long term at an affordable rent
- You get all your secured debts, mortgage and any arrears paid in full
- You will often get a tax free lump sum left over from the sale
How does this benefit my new landlord?
- Your new landlord gets a property as less than the market value
- He or she also gets excellent long term tenants in the form of you and your family
- The landlord gets no vacant periods
- The landlord knows that the ex-owners will look after the property in the same way as before and therefore repairs and maintenance costs are lower than renting on the open market.
What’s the catch with Sell and rent back?
The ‘catch’ is that you will no longer own your home. However, the chances are that in reality your mortgage lender and your secured loans lenders actually own most of your property today anyway.
Anyone with a mortgage doesn’t really ‘own’ their own home and can be repossessed at any time if there are arrears on the mortgage or loans.
You will lose some of your equity in the home but the reality is that this is money you may have made with a rising market, but would only ever benefit you if you were able to sell your home but didn’t need to live anywhere else, because everyone else’s homes are more expensive to buy too!
So in return for giving up some of the paper profit you may have made in the last few years on your home, you can substantially reduce your actual day to day living costs by not having to pay mortgage interest, secured loan interest and penalties on missed payments.
Renting in almost all parts of the UK is now much cheaper thaneven the cheapest mortgage even for those with a perfect credit rating.
More importantly, you get to stay in your own home long term.
