What do you think about sell and rent back schemes? Db home soloutions inpaticular?

gibboking

Hi.

Just wondering what your thoughts are about buying and renting back your property?

DB Home soloutions are offering to buy a friends house and they can live in in forever.
I want to help them make the right decision and look at all options first.

Is this a normal offer?

bitsandpieces

Many of these firms buy your property at well below market price. You get a contract to rent it from them at a rate you can (generally) afford. This contract lasts for e.g. 1 year.

After this period, the firms are free to massively raise rent, evict you, etc. They *could* continue renting to you at a reasonable rate, but they could generally make much more money by taking other approaches.

I wouldn't go for this type of deal. If you need to sell, sell at market price and then move into rented accommodation: moving is hard, but selling to a sale and rent back scheme could be a *very* expensive way of postponing this by maybe 1 year.

gibboking

They are panicing a bit. Fallen behind with all bills including mortgage and secured loan.
Living on benefits with intrest paid on mortgage by disability allowance.
I have pointed them in the direction of shelter and here but I think its all a bit overwhelming for them.

G_M

Bitsandpieces is SOOOoo right. Beware.
Look at some of the other sites here too eg bankrupcy, disability

Also I'd recommend debt councelling (Free debt councelling - do NOT pay for this)
Consumer Credit Counselling Service
National Debtline
Citizens Advice Bureau

clutton_2

if this company is not registered with the FSA then do not do business with them. Ask for their FSA number . All Sale and Rent Back firms now have to be registered, and i hear that FSA are making it almost impossible for small firms to get through the Compliance REquirements - it is likely there will be VERY few firms registered as FSA basically does not approve of SARB

SouthCoast

More from the FSA:

"Sale and rent back can be the right solution for some consumers, but many of the people typically targeted are financially vulnerable and have been badly hit by the experience. The FSA’s proposed new rules will help to protect consumers. We want to prevent high-pressure and inappropriate sales, and help consumers understand sale and rent back products, so they only enter into sale and rent back where it is an appropriate and sustainable solution for them."

http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/128.shtml