Rent back deals 'need firm rules'

neverdespairgirl

Talk about the blindingly obvious.....



Tighter regulation is needed of firms offering sale and rent back deals to struggling homeowners, according to the Office of Fair Trading (OFT).
Under these deals, people struggling to pay their mortgage sell their home at a discount to firms who let them stay on in the property as tenants.
But an OFT report found that this was not the best option for some, and others were quickly evicted.
It wants the estimated 1,000-plus firms involved to be more transparent.
An unknown number of amateur landlords are also involved in the relatively new industry.
The OFT said that about 50,000 transactions of this kind have already taken place.



http://news.bbc.co.uk/1/hi/business/7669640.stm

WTF?_2

neverdespairgirl wrote: »

Talk about the blindingly obvious.....



Tighter regulation is needed of firms offering sale and rent back deals to struggling homeowners, according to the Office of Fair Trading (OFT).
Under these deals, people struggling to pay their mortgage sell their home at a discount to firms who let them stay on in the property as tenants.
But an OFT report found that this was not the best option for some, and others were quickly evicted.
It wants the estimated 1,000-plus firms involved to be more transparent.
An unknown number of amateur landlords are also involved in the relatively new industry.
The OFT said that about 50,000 transactions of this kind have already taken place.



http://news.bbc.co.uk/1/hi/business/7669640.stm

These parasites are preying on the desperate, unwary and financially naive.

Selling your house to one of these 'buy and rent back' companies is just about the most stupid thing you can do.

This needs to be strictly regulated - ie. Guaranteed security of tenure for a well defined period should they sell, householder to receive an independent valuation of their property prior to sale.

GDB2222

!!!!!!? wrote: »

These parasites are preying on the desperate, unwary and financially naive.

Selling your house to one of these 'buy and rent back' companies is just about the most stupid thing you can do.

This needs to be strictly regulated - ie. Guaranteed security of tenure for a well defined period should they sell, householder to receive an independent valuation of their property prior to sale.

I totally agree. However, if there's anyone on this forum who is "desperate, unwary and financially naive", I'll be happy to prey on them if they want. They couldn't find a nicer parasite ...

geoffky

The vermin just need wiping out....

EdInvestor

One thing people do want is a fast and guaranteed house selling service.

How much discount would people pay ( leaving the rent-back aspect out of it for the moment) for such a service, provided within say a 2 weeks with fixed price, no gazundering/gazumping?

If the discount wasn't too onerous, a company offering such a deal might do rather well right now, with most buyers being for cash (and thus no lenders involved to distort the process).

The lack of work coming agents/surveyors and solicitors way, could be exactly the right time for such a service to get off to a good start.Perhaps any regulatory change should act to promote such an idea?But as the HIPs debacle has shown, it would be much better for the market itself to respond to demand.

The self regulatory arrangements on equity release have proven a useful model in professionalising this product. https://www.ship-ltd.org.

northeast1976

!!!!!!? wrote: »

These parasites are preying on the desperate, unwary and financially naive.

Selling your house to one of these 'buy and rent back' companies is just about the most stupid thing you can do.

This needs to be strictly regulated - ie. Guaranteed security of tenure for a well defined period should they sell, householder to receive an independent valuation of their property prior to sale.

I agree regulation would be a good thing as i have been campaigning for it to be regulated since january

however heres a thought , are the goverment going to be regulated? if so how ? as the FSA is run by the goverment! mmmmmm a goverment that is self regulated !! the reason i ask is if you didnt already know the goverment are proposing to do SARB (sale and rent back) themselves

will regulation come in ? i hope so but i dont think it honestly will for a long long time ................10 years??!

WTF?_2

EdInvestor wrote: »

One thing people do want is a fast and guaranteed house selling service.

You will sell your house very quickly if you put it on the market at a good bit below the local competition and invite 'cash' offers for a further discount. No special service is required.

The whole 'sell and rent back' thing is nothing more than a con job to screw over people who are really desperate, financially naive or vulnerable. The 'rent back' thing is used to extract a much lower selling price that could otherwise be attained and is often abused with the tenants being evicted very quickly or rents jacked up to levels above what the seller was promised.

And that's just the 'above board' operations. Increasingly it's being used as a scam whereby no repayment is made on the mortgage used to buy the property and the people running the company do a runner with the cash.

silvercar

Sale and rent back wouldn't work if people were prepared to face upto losing their home. It only works because people are trying to get away with not telling their friends, family and neighbours that they have hit hard times and sell up.

If you take the rent back out of the equation, you're left with a quick sale. Then it becomes a question of who can convince you that they can deal quickest. It also opens up the possiblity of auctions.

GDB2222

EdInvestor wrote: »

One thing people do want is a fast and guaranteed house selling service.

How much discount would people pay ( leaving the rent-back aspect out of it for the moment) for such a service, provided within say a 2 weeks with fixed price, no gazundering/gazumping?

If the discount wasn't too onerous, a company offering such a deal might do rather well right now, with most buyers being for cash (and thus no lenders involved to distort the process).

I would be happy to offer such a service, and in general I would pay 25%-30% below forced sale market value. I haven't offered that service, because I would expect that would be too much discount for people to stomach. Most people would not regard that discount as fair, and I wouldn't blame them, but I think it's about the least discount that would give a decent chance of making a profit.

"2 weeks with fixed price, no gazundering/gazumping" - that's not a problem. I would expect lots of time-wasters/dreamers, so I would want to charge some sort of fee up-front.

In a rapidly falling market, there would hardly be any circumstances in which I would be prepared to offer an ongoing rental. The idea would be to buy the property at a massive discount, then sell it on ASAP.

Sorry if this upsets someone - it's just my ideas of what is commercial in today's market.

northeast1976

GDB2222 wrote: »

I would be happy to offer such a service, and in general I would pay 25%-30% below forced sale market value. I haven't offered that service, because I would expect that would be too much discount for people to stomach. Most people would not regard that discount as fair, and I wouldn't blame them, but I think it's about the least discount that would give a decent chance of making a profit.

"2 weeks with fixed price, no gazundering/gazumping" - that's not a problem. I would expect lots of time-wasters/dreamers, so I would want to charge some sort of fee up-front.

In a rapidly falling market, there would hardly be any circumstances in which I would be prepared to offer an ongoing rental. The idea would be to buy the property at a massive discount, then sell it on ASAP.

Sorry if this upsets someone - it's just my ideas of what is commercial in today's market.

I actually do sarb (sale and rent back) as you will see from a previous thread titeled "rent backs - bad name?"
the biggest problem is that people dont understand it and only hear of the horror stories
an example i had an appointment with a lady last night at 730pm and we agreed a sale @ 48% below market value --- now be honest if i didnt say anything else how many of you are swearing your heads off at the computer right now and calling me all sorts of names??? i know you are!
let me explain mrs xxxx rang me two weeks a go, im in trouble, i firstly i asked what options have you explored none she replied so i advised her to seek independant legal advice and to go to the CA , what did they do for her ? nothing! and i mean nothing she will be going court on monday for repossesion
some of you will be saying well why didnt she sell it for £100,000 on the open market ie 60k discount - it would take 3 months to sell it, fact ie 1-2weeks to get it on the market 4weeks to sell it and then 6 or more weeks for the mortgage to complete , unfortunatly people in her position dont have the time 3 months she will be well and truley gone as if you or i miss 3 months mortgage payment we are evicted, again some of you are/will be saying no not a chance well i am said to say this but yes you are ive seen it first hand i have seen 7 evictions done in less than 3 months where we are unable to help northern rock managed 5 off them
so what about remortgage? its to late they usally have missed a mortgage payment so NO lender in the current market will touch them
so what about auction? again its time auctions dont happen every week there more like every 2 to three months
so why 48% ? well it very simple its the most i can offer, why ? because of two reasons one the client wants to remain in the property for as long as she can but only wants to pay £xxxpcm for rent as that is the most comfortable amount she can pay if she could afford more we would increase our offer
two its the most we can borrow from a lender based on the rental income.
we do state that she can also stay in her property for as long as she likes however that does depend on a few factors we can only offer 12 months at a time on an ast also if our company went bust then she would be evicted or if the comany fell on hard times and needed equity we would be forced to sell the property i explain everthing in detail and then only then if they are happy do we proceed, most people dont want to move like her she has lived there 22yrs we also offer if she is back on her feet that she can then buy the property back from us
so i will be attending court with her on monday to save her property , she will still live there and her out goings have halved plus we will be putting in a new boiler bathroom and kitchen and recarpet the whole house

what about an iva? she couldnt as it was a mortgage and a secured loan
what about bankruptcy? yes she could have done but the lenders are only selling the propertys for the mortgage amount and there legal costs , yes they are supposed to sell for a fair price and the rest goes back to her but not in her situation plus what is a fair price in the market place at the moment as they have to sell quickly so she would be homless and maybe 5k in her pocket 6 or 12 months down the line

NO THIS IS NOT SPAM I AM NOT ADVERTISING MY COMPANY DO NOT CONTACT ME TO BUY YOUR PROPERTY I WILL NOT

I AM JUST TRY SHOW PEOPLE THE OTHER SIDE I PROMISE TO ANSWER ANY QUESTIONS HONESTLY

yes there are a lot of fly by night companys out there more now then there has ever been please see my thread "rent backs - a bad name"

northeast1976

as for 25-30% bmv most investors wont touch it unless its 35-40%bmv

and heres a question, why do you think repossessions have suddenly risen over the last couple of months - answer the lenders have changed all the buy to let products down to a max of 75% so investors who would have bought the property at 15-25% cant so the repo rate has risen