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Advice needed regarding 'Sell and Rent Back'

in Debt-free wannabe
47 replies 4.6K views
My situation is this. I am on a fixed income (working and child tax credits). I decided to buy my council house about three years ago simply because the mortgage at the time was a lot less than my rent.
Trying to keep this as short as possible, the main problem now is that the mortgage repayments have just gone up and up over the years to more than double the original figure, and I just cannot afford it any more.
I have tried to find a cheaper mortgage lender, but because mine is the only wage coming into the house, and because I am on an IVA programme, I have been told that not many lenders would want to take it on, and if I did find a lender, that the rates would be the same.
Apart from the IVA payment, all my other outgoings are utility bills and housekeeping, so there is nothing else I can get rid of, and the only thing I can think of doing now is to sell and rent back my house.
My problem now is that I cannot find any 'honest' information about this scheme. It sounds like a good solution, but my worry is that the 'rent' would be exactly the same as the mortgage repayments, or would start off reasonable and then escalate like my mortgage has.
Does anyone have any information or experience of this scheme? Or know of a website that could help me with this? Any help would be gratefully received.


  • KellsBellsKellsBells Forumite
    444 Posts
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    I'm not being very helpful I'm afraid, just wanted to suggest you put this on the on the homes buying and selling forum, as there'll be people a lot better equipt on that board to help you.

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  • rayday2rayday2 Forumite
    4K Posts
    From what I understand of these schemes you could end up even paying a little more in rent depending on how high the % of your mortgage is. Also you have to consider that if you rented from a private landlord and your boiler broke or tiles needed replacing you get the work done. From what I understand (you definately need to be asking these questions) you are responsible for the upkeep.

    So you pay all those years rent, pay for repairs and at the end of it you don't own the property. I personally if I was in the boat would rather sell up get rid of all debts and rent privately save a bit and then get back on the ladder with a wiser head.

    I used to work part time in an Estate Agents and rent was pretty high compared to say a 90% mortgage on an equivalent property.
  • Sell and Rent back works no different to a private rent in regards to tenants rights and landlords obligations.

    THe level of rent is limited by the Rent Officer at the local council. A Landlord can't just set whatever figure they want and if you disagree with a rise, you can ask the Rent Officer to look at it - downside is that this can work both ways with him upping it if it's too low although the Landlord doesn't have to comply with any raise - it's just that the "Fair Rental Value" will be higher.

    THE LANDLORD is responsible for any repairs, not the tenant.
  • janakajanjanakajan Forumite
    17 Posts
    Thank you all for your advice. I did try the homes buying and selling forum, but I only found one similar post and it was suggested that they try this forum for advice, though I did find out that the buyers only give you 75% of the value of your house.
    I don't actually have any debt to get rid of (apart from the IVA payment), and this is the problem. Because my mortgage has risen so high, and because I can't earn any more money, I am struggling to pay regular household bills. More horrifying is that I know it's just going to keep rising.
    The reason I am considering selling my house and renting it back is so that I can stay put. My mum just lives a few steps away from me and I need to stay close to her (she's 76 and she has dinner with me every evening that I'm not working and stays a few hours). But maybe the rent will not be any different to the mortgage repayments, and I would end up in the same boat.
  • Eager_ElephantEager_Elephant Forumite
    4.7K Posts
    Part of the Furniture 1,000 Posts Combo Breaker

    The problem I can see is that if you sell your council house before a 5year period is up you have to pay back the discount to the council - would you be able to afford to do this.

    I see the problem you are having all the time, these mortgage companies that give mortgages to right to buys always increase their interest rates quicker than high street banks so the intial idea of owning your home looks very cheap but over time it is not.

    Could you contact your IP and ask for an amendment to the IVA, either a new creditors meeting where they agree to reduce your pence in the £ over the 5 years or you pay a reduced amount but over 6 instead of 5 years?

    The first idea will cost more money (in that more will come out of the IVA pot at the end of the term) but would be more worthwhile.

    Any questions let me know

    41.9K Posts
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    have you tred to remortgage to get a lower rate? try an independant mortgage advisor
  • ShineyhappyShineyhappy Forumite
    1.9K Posts
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Have you tried posting a statment of affairs so we can see if we can help you make any savings thus making the mortgage payments easier?

    Also have you thought about asking the bank if you could change the mortgage to interest only for a year or so?
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  • Put up your full financial facts so people can advise on whether this is the best option, before you decide on this path. There may be better, more acceptable things you can do than sell. You may be missing something that will alleviate your dilemma anyways, worth a try.
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  • Hi Clapton. Yes, I have tried to remortgage, but my age and my income go against me. But thank you for your suggestion.

    EE, Thank you. Yes, you are right about having to pay back the council discount, which is about £25,000. I hadn't thought of that. It seems every way I turn there is a brick wall.

    I think I've tried to play down the desperation element here, so that I don't sound over-dramatic and have all you good people avoid my problem, but the truth is that I am actually very desperate indeed.

    Regardless of past mistakes, my financial situation at the moment is dire. When I have paid out my regular bills and the IVA payment, There is only £47 a week left for my 11-year-old (adopted) son and me to live on. Even worse, I was unable to pay my last electric bill, and to save being disconnected, I have had to agree to a prepayment meter being fitted. They have told that they will recover the debt at £7 per week, which means that I now have only £40 a week to live on, and out of this I will have to pay for my electricity as and when I use it. The meter is being fitted next Thursday, and I really feel that this is my Doomsday.

    Your idea was good about asking for a reduction in my IVA repayments, but there are problems here too. The company I chose to help me, (or rather, they chose me after the first company I contacted refused to help me because my debts were not high enough) I have lost trust in. They actually missed one the payments and I subsequently received demands from my creditors and a default notice from my old Bank. They caught up the following month by doubling up the payment, but it doesn't leave me in a very comfortable position. I don't think they would go with your idea, or might even drop me as a client if they think I am being awkward.

    So that's the gist of my true situation. And I really don't know where to turn or what to do next - apart from cry.

    My Mum, by the way, knows nothing about any of this. She thinks everything is fine, and I want to keep it this way. She has never been in debt in her life, and would be shocked at the enormity of mine. She is a terrible worrier and suffers from high blood pressure. My son and I are her only genuine source of love and company, and I couldn't hurt her or face the consequences of her finding out how very bad my life is.

    And that's it. But I thank you all deeply for your responses. You are wonderful and this is a wonderful site. It's really heartening to know that there are people here who have taken the trouble to listen and try and solve my problems without criticising.
  • Hi Davethecardboardbox and Shineyhappy. I have just read your replies after posting mine. Firstly, how do I post a statement of affairs please? And secondly, I don't have my mortgage with any Bank (they wouldn't give me a 25-year mortgage because of my age), it's with a lending company called Capstone Mortgages. I have asked them for advice by the way, but they only offered me an interest-only option. It sounded OK, but when I received the forms I found that I would only be saving about £40 per month on the new figure, which they warned me would go up by £57 if the interest rate went up by 1%, and then I would have to tell them how I proposed to repay the rest of accumulated figure later, which was the most ridiculous amount - about four times more than the settlement figure is now.
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