Selling and renting back

TroubledTarts

@eddddy

Yes these companies would not be doing this if they didn't expect a large margin of profit.

I suspect the figures are even worse now with house prices not surging as they have in the past

doodling

Hi,

Sale and rent back is a regulated activity - anyone engaging in it must be registered with the FCA. There are very few companies authorised to work in this area and a quick Google suggests that FCA rules have made it sufficiently difficult (unprofitable?) to work in this field that they don't offer it any more.

If your friend is dealing with an individual then (unless that person has somehow got themselves authorised by the FCA for this activity) then they are a criminal (it being a criminal offense to do this business without FCA authorisation).

Making high value financial agreements with criminals is generally not a good idea.

FreeBear

Making high value financial agreements with criminals is generally not never a good idea.

Fixed that for you. Criminals will have access to enforcement methods that will extend to the illegal and possibly fatal.

Even if you are dealing with a legitimate company with FCA oversight, one should always take professional paid for advice before committing. Using public forums & social media is not a substitute - However they can point you in the right direction long before getting to the point of turning down that particular path.

FlorayG

Thanks all

I suspect neither she nor the buyer ( who I since discovered owns and lives in another flat in the same building) have a clue about any of this.

Can someone tell me please why sell and rent back has to be FCA regulated? Even if only private individuals involved?

Yet again; this is not a friend of mine, I'm just curious about how this works, I'd like information please not advice

Thank you

eddddy

Can someone tell me please why sell and rent back has to be FCA regulated?

Because a review by the Financial Services Authority in 2011 found so many vulnerable people were being ripped-off by these schemes - so they decided that these schemes need to be regulated.

Even if only private individuals involved?

Sadly, there are plenty of private individuals who would be happy to buy somebody's house - and then evict them - if it made them £50k or £100k or whatever in profit.

(In theory, a private individual might be able to avoid being regulated if they can show they are not doing this to make a profit - i.e. it is a charitable act. But if the FCA investigate them, and decide they are doing it to make a profit, then it's a criminal offence.)

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82066082#Comment_82066082

You could well be right in that both parties think it is genuinely a possible good idea, but neither have the knowledge to have thought through the potential implications.

k12479

https://forums.moneysavingexpert.com/discussion/comment/82062170#Comment_82062170

"But… your acquaintance could protect herself by requiring a 5 year, 10 year or 15 year (or whatever) tenancy agreement as a condition of the sale. (Assuming the buyer would agree to that.)"

Sale and rent back agreements had to have a fixed tenancy of at least 5 years. However, it's not clear what effect the Renters Right Act might have on that, or if it's just a moot point as the market appears dead.

FlorayG

https://forums.moneysavingexpert.com/discussion/comment/82073034#Comment_82073034

You may be correct there; the new act doesn't allow fixed term tenancies and the people who set it up probably that's yet another thing they didn't take into account.

Anyway I hear the sale is going ahead. If (when) the landlord evicts her the council will probably refuse to house her on the basis she put herself in that situation, and I would bet she hasn't thought about that, either.

Thanks for all the information everyone, it's been very interesting

TroubledTarts

Maybe try and get the link to this thread to her, even if not a friend.