selling to rent

tonycree

i've heard of schemes to sell your property to rent it back
are there any good ones?
what are the pitfalls?
this may get me out of the fix I'm in
short term, I know,
but out of the fix...
renting will be less than the mortgage,
hopefully I'll sell for enought to pay the mortgage off...

m00m00

worst case scenario

they give you a fraction of it's value and kick you out after 6 months when the AST expires.

Gorgeous_George

It's always easy to slur these schemes (and I have done so in the past).

However, in a rapidly falling market, the silly prices that they offer do not seem quite so silly).

There are still the risks associated with an AST.

GG

geoffky

Danger!!!!!!

mummytofour

Go and ask this same question over on the debt free wanna be bored I think you will have some interesting replies, IE dont do it and why, they will also advise you on ways to re-structure you finances.

PasturesNew

tonycree wrote: »

renting will be less than the mortgage,
hopefully I'll sell for enought to pay the mortgage off...

I don't see how renting it will be less than your current mortgage because the rent they get from you will have to cover their mortgage, which will probably be larger than yours is/

Businessguy_3

Hi..im a forum newbie...but have some very interesting news concerning a company called..A Quick Sale...This company will consider buying your property and also allow you and your family to rent it back...ok..thats the outline...

Yesterday..I approached them with a view to considering doing exactly what it said on their tin/packaging...Id been on their website and checked what they are all about..

They claim to offer 75-90% of open market value..allow you to rent back for the period of time that suits your situation and even gives you the opportunity to buy your house back..at a pre-agreed value..all sounds good eh...ok read on...

It is also worth mentioning..last week,approached 3 Estate Agents,who all more or less agreed to market our property for £135-£140k...because of the current property market,which we felt was very fair and reasonable a valuation/marketing price.

So when this person from a Quick Sale rang yesterday evening,I explained the situation..in our property was valued at around £140k...he wanted to know how much we had outstanding on our mortgage and what our current repayments were as well...together with an in-depth analysis of what type of property it was and condition.

I had done some sums beforehand..and thought that if A Quick Sale could offer us 75% or more of £140k we'd seriously consider their offer...however..this person...who stated he was the Area Manager for Leeds..told me what their offer was....and it was a jaw-dropping couple of mins...

He offered just less than 68%...which coincidently was just enough to clear our mortgage..and stated the rent would be £650 p/mth..(about £90 p/mth more than we were currently paying on our mortgage)....

Ok...now the really interesting bit....I have previously worked for a similar company..and also know...very very well..one of the A Quick Sale associates...who has confirmed how this company work to me,on several occasions.

They wanna buy only at around 70% market value...(so you can take with a pinch of salt what their website actually says)..but very interesting is...that nearly all franchisee's or associates of A Quick Sale...finance the deal up to 80-85% loan to value...

So in my scenario...they offered £95k....(68%) but would be financing with their chosen lender at least 80%..ie £112k...difference £17k...

For there deposit..ie difference from purchase price..£140k to the amount they actually finance £110-£112k...they use an open bridging finance solution.

Their own solicitors...then confirm to the mortgage lender that they have the necessary deposit from the purchaser..ie the franchisee...of £28-30K...

But does the mortgage lender know the property seller is only getting £95k out of the £110-£112k mortgage advance...my information tells me they dont..!!!

Ok...moving on..I know they pay all the costs and disburesements on behalf of the selling vendor..ie the solicitors fees,the stamp duty..etc etc..which I know would be about £5k..but when you see that the balance left after this deduction is £10-£12k...is this company merely a modern day Robin Hood...!!!!

Another interesting observation is what they said our rent would be:£650 p/mth....

I did some investigations on what current Buy-to-Let Lenders are currently charging rate wise...and surprisingly..if you multiply £110k by 7.24%...which is what the Bank of Ireland are currently charging for a BTL Mortgage...you arrive at £663 p/mth repayments.

So...not only would A Quick Sale wanna fleece me for £10-£12k on the deal..
but I would be more or less paying their new mortgage repayments...

From a regulatory point of view..how can this company state on their website that they pay 75-90% of open market value and get away with the inconsistency of offering well below,even their own advertised minimum threshold.???

I recently listened to a BBC Moneybox article on the Radio concerning the Sell and Rent Back industry and one of their directors,a Glenn Ackroyd took part in the programme....he also claimed that their company offered 75-90% value and were part of this & that trade association and that they were professional & ethical.

I think my post says it all....and the analogy is...if your planning to Sell your property and rent it back..to such as A Quick Sale...make sure your sat down..n ready to have some representative try and humiliate and rob you blind...and probably become...at least £10k richer within one day..if you agreed to proceed and completed on a typical offer from them...:money:

tonycree

rethink needed
thanks enormously
t.

FraudBuster

OFT launches market study into sale and rent back

62/08 14 May 2008

The OFT will be contacting key parties directly. Other interested parties can submit written views to:
Sale and rent back study
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Email: [EMAIL="saleandrentback@oft.gsi.gov.uk"]saleandrentback@oft.gsi.gov.uk[/EMAIL]

http://www.oft.gov.uk/news/press/2008/62-08#

ManAtHome

Businessguy wrote: »

From a regulatory point of view..how can this company state on their website that they pay 75-90% of open market value and get away with the inconsistency of offering well below,even their own advertised minimum threshold.???

Because they're not yet regulated, and probably won't be until the damage has been done judging by standard FSA practices.

Good post/warning by the way - I'm sure there will be one or two companies doing this properly/equitably as a long-term business, but doesn't quite work (for the customers) as a franchise mega-bucks sales opportunity.

seven-day-weekend

Why don't you sell and rent on the open market?

Would probably get more for your house and a cheaper rent.