Help needed..Sell & Rent back Schemes??

scrumymummy

Hiya,
I'm a newbie on this site but need advice on sell & rent back schemes.

I need to sell my home to pay to pay off lots & lots debts and reduce my outgoings. My mortgage is currently £1200pm and the current rental of similar properties in the area is £700pm

I want to remain in my home (to avoid disrupting my children) for at least the next 3-5 years before possibly moving abroad.
Are companies offering these schemes a good idea?
Does anyone know of any other alternatives?
I'd be most grateful for any advice
Thanks
SM

silvercar

the danger of these schemes is you are losing the value in your house, most of them pay 70-80% of the true value. You would be better of selling your house yourself and arranging to rent somwhere else.

whatever you do, don't touch anyone that tells you to pay for their survey to value the property. A lot of the less scrupulous operators in the speedy sale brigade do this. Any legitimate quick sale person will do their own valuation.

scrumymummy

Thanks for the advice I hadn't realise they would give as little as 80% of the property value.
I guess it would be better to sell privately to a person who wanted a very long term tennant then I could use all the equity to pay off my debts.

Does anyone know of any such person????

prudryden

If you have a local Estate Agent that has been doing business for many, many years in your area, he will have local contacts who he will approach without actually putting your house on the market.

scrumymummy

thanks prudryden there is such a company locally so I'll give them a bell tomorrow.

silvercar

scrumymummy wrote:

Thanks for the advice I hadn't realise they would give as little as 80% of the property value.
I guess it would be better to sell privately to a person who wanted a very long term tennant then I could use all the equity to pay off my debts.

Does anyone know of any such person????

So you want to find someone who would let it to you long term. They would be looking for a return of at least 5% on their investment, however they fund the purchase. Would 5% of the property value be significantly higher than the rent you would expect to pay? If so, I don't think its going to be easy to find a buyer who will want a long term rent back.

scrumymummy

Funnily enough the annual rental of similar properties in my area is actually exactly 5% of my property value! So maybe there is hope for me..

blue_mum

sorry to hijack your thread, we are thinking of doing the same either selling and then renting somewhere, but would prefer to stay in our own home, looked at the buy to rent back scheme but would loose out on to much money. I didn't even realise local estate agents would know of people who may buy so that we could rent. I have just worked out the 5% thing and it's less than our mortge at the mo. Would this sort of buyer offer around the house worth or nearer to the buy to rent back scheme offers. cheers and good luck in the search for your buyer. Blue

roswell

Just a thought for you, lets assum your house is worth £100 000 and you have lived in it 5 years and purchased for lets say £50 000.

Company X offer 70% of the value of your house and let you rent it back.

They give you £70 000.
They then want rent based on 5 % of 100 000

so rent £5000 / 12 = £417 a month. This is now about the same or more than your £50 000 mortgage payment.

So far the company have your property + £30 000 equity + monthly rent. and the good news if they want to increase the rent they can ... if they want you out so they can get there £30 000 equity they can say Bye bye months notice.

Thats just a picture of how they can operate.

scrumymummy

hmm thats not a pretty picture really.
Think I'm going to have to waterproof me old tent

HelpWhereIcan

I recently helped someone facing repossession and they considered selling to one of these companies with a view to renting it back.

They wanted to see if it would be possible to put in a clause giving them the option to buy the property back after a year and spoke with the solicitor who was dealing with their remortgage about this.

In no uncertain terms the solicitor told them she would not act for them in that transaction and warned them not to touch one of these companies as she had seen a number of cases where the company terminated the tenancy agreement as soon as the 12 months was up and put the house up for sale on the open market.

She did not know of one where the company buying the property had allowed the previous owner to rent the property from them for more than 12 months and had made the decision that she would no longer be willing to act for people looking to take part in one of these sale and rent back arrangements.

As silvercar and prudryden suggest, you may want to try and find a private individual who looks at buy to let as a long term investment and may therefore be willing to take on a long term tenant.

As for alternatives, you do not mention if you are actually facing financial difficulties or if you just want to get rid of debts. If you just want to get rid of some debts and do not need to sell urgently, I would consider selling and moving into rented nearby which will at least allow you the fulll benefit of your equity.

If you are struggling financially, there will be a number of other options which you should get advice on from places such as the CAB, Debtline etc. You may want to have a word with a mortgage adviser/your current lender to see what options they can offer.

Some councils and housing associations offer a 'mortgage rescue scheme' where your local council will buy your home from you, paying off your mortgage, and you will continue to live there as a tenant. There are however fairly strict criteria and not all councils offer them. Give yours a ring, see if they do and if you qualify.

A remortgage may be a possibility to bring down your costs, but you will be putting your home at risk of repossession by adding previously unsecured debts to your mortgage. Impossible to say on a forum if it will be a good option for you and there will be both pros and cons. Depending on how 'bad' things are, there may be more cons than pros.

Investigating other options such as negotiating with your creditors or even setting up an IVA could also help while keeping you in your home and could tie in with your plans to move abroad in 3 years as you would still have the house to sell and may see some of your debt written off.

Apologies if none of this applies to you, but hope this helps