Sell and Rent Back Schemes?

keengardner

Does anyone have experience of Sell and Rent Back Schemes. There are lots advertising in Yellow Pages, but not sure if they are cowboys or not. Do they offer ridiculous low prices and then make you pay high rent and then give you notice to leave?

L-Jay

No personal experience, but this makes an interesting read http://www.guardian.co.uk/money/2009/jun/07/property-home-owners-sale-rent

googler

The Office of Fair Trading can hear the spurs clicking, and are looking to regulate the sector.... see their market study

Nosht

Most good firms try to build up a decent relationship with their clients, making it far easier to work with as, after all, this is their business.

Regards,

N.

GDB2222

keengardner wrote: »

Does anyone have experience of Sell and Rent Back Schemes. There are lots advertising in Yellow Pages, but not sure if they are cowboys or not. Do they offer ridiculous low prices and then make you pay high rent and then give you notice to leave?

I think you have summed it up very nicely.

There are lots advertising in Yellow Pages, but not sure if they are cowboys or not. -- Assume they are all cowboys, as virtually all are, and how can you sort out any genuine ones?

Do they offer ridiculous low prices -- Yes, sweetened by a low initial rent, and promises, such promises! (none of them enforceable, of course.)

and then make you pay high rent -- Yes. the first 6 months will be low rent, to sucker you in, then it goes up.

and then give you notice to leave? -- Yes. You have no security.

silvercar

Nosht wrote: »

Most good firms try to build up a decent relationship with their clients, making it far easier to work with as, after all, this is their business.

Regards,

N.

The difficulty is finding out whether the firms are looking for long term rentals or short term capital gain.

Firm A

Buys at 25% BMV, offers long term rental agreement at market rate. Tenant signs 12 month AST.

12 months later increases rent massively / gives tenant notice/ sells property pockets difference between sale price and purchase price and walks onto next deal.

Firm B

Buys at 25% BMV, offers long term rental agreement at market rate. Tenant signs 12 month AST.

12 months later, keeps rent, keeps happy tenant, happy with rental income and long term capital growth.

As most lenders will not allow landlords to offer more than 12 month AST, a potential sell-to-rent-back client doesn't know which sort of firm they are dealing with.

Bermuda_John

I run a house buying company

There are some shady characters in the sale and rent back market, as this is the golden goose and everyone wants a piece of the action.

You get to buy a house at a significant reduction (usually around 20% - 25%) and you are guaranteed a good rent. Previously you could then remortgage or use a bridging loan to get your deposit back on day 1.

This method of financing has now been stopped and the Sale and Rent Back market is now regulated.

All firms in this market are required to be registered with the FSA and there are tight restrictions on who can register. New firms are not currently allowed to register.

The fees are large and the hope is that they weed out the unscrupulous firms, leaving the bigger more experienced boys to fight it out.

I personally would ask any company how long they have been in the business and for their FSA details.

My company no longer deals with Sale and Rent Back directly, although it is still advertised on the website, due to the new legislation and the costs and competition involved but i do refer clients onto a reputable sale and rent back business.

I'll be brutally honest, for me the finders fees I receive is enough for me and it outweighs the costs and legislation now associated with Sale and Rent back.