selling and renting your house back

jamesy224

can anyone offer any advice or experiance on the companies who offer to buy your house and then rent it back to you.

bryanb

They apparently pay less than market value, I've heard 80% or so. Also when you are renting they can terminate the rental agreement at 6 months.

seven-day-weekend

Yes, AFAIK you only get an Assured Shorthold Tenancy, and they only need to give you two months' notice.

Could you explain your situation a little more fully and see if we can come up with any other suggestions? These schemes really are not a good idea.

brit1234

I heard they are sharks, I think MPS are rushing through legislation to regulate them as they aren't covered by the FSAs remit.

MrsManda

The only people I'd do this with, at least until the Government gets around to regulating it, are housing associations/councils but it can be really hard to get them to buy your house due to the pressures they themselves are under.

brit1234

Here is a link to the Moneybox report on the scheme form last month.

http://search.bbc.co.uk/cgi-bin/search/results.pl?tab=av&q=rent+back&edition=d&scope=all

Save4ArainyDay

Brit1234 - you are obviously so well informed - NOT!

Just a few weeks ago I met a lady with 2 children who was due to be repossessed on Tuesday 18 March. I could not finance the purchase of her house myself as the valuation by the bank came in at £20,000 less than the estate agent had lead her to believe the place was worth. The exercise of viewing the property (over 100 miles each way), paying for searches and valuation cost me over £500.
However the poor lady could find nobody to buy the property and she and her children were on their way to a B&B or a hostel as the LA had no property available for them.

After advertising and phoning everyone in the business I know I finally found her a buyer. The completion was less than a week before repossession was due. The lady now rents the property at a pre-arranged rent and the buyer has assured her that as long as the rent is paid then she can continue to live there as long as she wants. It is not the buyer's fault if the term of an AST is 6 months - that is the way it is. No landlady/landlord is interested in losing a paying tenant - especially one who has provided all their own furniture etc.

Please don't tar everyone in the Sell and Rentback business with the same brush - yes doubtless there are a few rogues around but they are FEW in my experience. Just like there are rogue priests, teachers, councillors, MPs, doctors, solicitors etc.

Now to answer the original query

Sell and Rentback works like this

Buyer gets 85% mortgage (based on ACTUAL value given by Surveyor)
Buyer has to make sure that the rent x 1.25 per month is equal to or more than the rent.

If mortgage is £500 then rent has to be £500 x 1.25 = £600

Current buy to let interest is 6.09%

So £100000 purchase price means a mortgage interest only of £6090 per year

£6090 x 1.25 = £7612.50 (rent per year required)

divide by 12 = £634.38 pcm rent

The sell and rentback buyer also pays all the solicitors fees etc. so there is NO COST to the seller whatsoever.

If the seller wants to pay less rent then they have to take less money from the sale - simple economics

If you are being repossessed Sale and Rentback is one of the only options available to most people.

How many empty Council or Housing Association proerties are there in your area??

In the example I gave of the lady with 2 children - her outgoings (which she could not fund any longer) were reduced by about £300 per month. She can now live within her means.


If anyone needs any further information please do not hesitate to contact me. If anyone is considering selling I will tell you what price you should expect to get from a reputable Property Investor.

I hope this serves to educate those that until now have held an unreasonable view of these schemes.

tallyhoh

How do tenants get on if after selling their home & clearing any outstanding debts they try & claim housing benefit?

Would it appear that they had disposed of their property in order to take advantage of the system?

Should I point out that I am not offering an opinion on this, I ask because I dont know the position.

Thanks

ginger_nuts

tallyhoh wrote: »

How do tenants get on if after selling their home & clearing any outstanding debts they try & claim housing benefit?

Would it appear that they had disposed of their property in order to take advantage of the system?

Should I point out that I am not offering an opinion on this, I ask because I dont know the position.

Thanks

where I live they wont pay housing benefit for 5 years after you have sold your property .Maybe if you can prove you dont have the money it would be different

brit1234

Save4ArainyDay wrote: »

Brit1234 - you are obviously so well informed - NOT!

Just a few weeks ago I met a lady with 2 children who was due to be repossessed on Tuesday 18 March. I could not finance the purchase of her house myself as the valuation by the bank came in at £20,000 less than the estate agent had lead her to believe the place was worth. The exercise of viewing the property (over 100 miles each way), paying for searches and valuation cost me over £500.
However the poor lady could find nobody to buy the property and she and her children were on their way to a B&B or a hostel as the LA had no property available for them.

After advertising and phoning everyone in the business I know I finally found her a buyer. The completion was less than a week before repossession was due. The lady now rents the property at a pre-arranged rent and the buyer has assured her that as long as the rent is paid then she can continue to live there as long as she wants. It is not the buyer's fault if the term of an AST is 6 months - that is the way it is. No landlady/landlord is interested in losing a paying tenant - especially one who has provided all their own furniture etc.

Please don't tar everyone in the Sell and Rentback business with the same brush - yes doubtless there are a few rogues around but they are FEW in my experience. Just like there are rogue priests, teachers, councillors, MPs, doctors, solicitors etc.

Now to answer the original query

Sell and Rentback works like this

Buyer gets 85% mortgage (based on ACTUAL value given by Surveyor)
Buyer has to make sure that the rent x 1.25 per month is equal to or more than the rent.

If mortgage is £500 then rent has to be £500 x 1.25 = £600

Current buy to let interest is 6.09%

So £100000 purchase price means a mortgage interest only of £6090 per year

£6090 x 1.25 = £7612.50 (rent per year required)

divide by 12 = £634.38 pcm rent

The sell and rentback buyer also pays all the solicitors fees etc. so there is NO COST to the seller whatsoever.

If the seller wants to pay less rent then they have to take less money from the sale - simple economics

If you are being repossessed Sale and Rentback is one of the only options available to most people.

How many empty Council or Housing Association proerties are there in your area??

In the example I gave of the lady with 2 children - her outgoings (which she could not fund any longer) were reduced by about £300 per month. She can now live within her means.


If anyone needs any further information please do not hesitate to contact me. If anyone is considering selling I will tell you what price you should expect to get from a reputable Property Investor.

I hope this serves to educate those that until now have held an unreasonable view of these schemes.

Will she be living there in 6 months, a year?

I'm so badly informed, there hasn't been any TV programs, radio broadcasts or newspaper articles on this subject.

Save4ArainyDay I put it to you that there is a higher chance of having a rogue rentback than a rogue rogue priests, teachers, councillors, MPs, doctors, solicitors. Especially as all of the latter are regulated and rentbacks are not. Please a little common sense, you know when things aren't controlled they have a higher tendancy to be taken advantage of. I also know that a lot of Buy to let let companies have moved into this area in the last year because they can't make the money in there original market. Now do you think their loyaty whilst unregulated is to Mrs Hopkins down the road or to getting as much money as they can. The buy to let industry is being heavily investigated by police lender and the FSA for fraud, why is there equal chance of unregulated rentbacks.

Recognised Problems.
1, Discounts far too large 60-70%
2, Allowing to stay pledges not being honoured
3, Unsustainable rentback companies that go bankrupt

Hence the nicknames Vultures, we need Regulation

*Banks will only fund to rent back schemes for short hold tenancies 6-12 months, there is also NO GUARENTEE that people can rent back after the sale.

PasturesNew

This lady was offered £220k for a house up for sale at £400k because the quick-buyer deemed the house was worth £290k, not £400k.

http://forums.moneysavingexpert.com/showthread.html?t=779557

Which is significantly less than one might expect a quick sale to reduce down to.

At the moment, it's hit and miss how much your house is advertised for and how much a quick-sale company will value it (sight unseen).