Sale and rent back What is sale and rent back?
Sale and rent back firms typically offer to buy your home at a discounted price if you are facing repossession and allow you to remain in the property as a tenant, but there are a number of potential problems.
Sale and rent back companies pay a fraction of your property's value
Sale and rent back operators typically buy a property for tens of thousands of pounds less than it is worth. If you are struggling with mortgage arrears and large debts, you may see it as your only way out of trouble, but there may well be better options, such as negotiating with your mortgage provider, remortgaging, downsizing or renting out your home and becoming a tenant in another property.
Targeting vulnerable homeowners with debts and arrears
Sale and rent back companies heavily promote their ability to complete a deal swiftly and quietly. The appeal of being able to remain in your home and avoid the upheaval of relocating, moving children to a new school, or letting friends and neighbours know about your troubles has attracted many to take up sale and rent back deals.
Most sale and rent back operators offer no rental guarantees beyond a standard assured shorthold tenancy. Previously, having sold their home for a bargain price, the former owner could have found themselves evicted at the end of a six or 12-month tenancy, or their rent raised to such an extent that they have to move, but the Financial Services Authority has now introduced rules to guarantee security of tenure for at least five years.