Sell and Rent Back Schemes

If you are facing financial problems and mortgage arrears using a sell and rent back scheme could be the right choice for you, it allows you to sell your house, clearing your debt and then rent your home back at an agreed rate so you don’t have to move.

Who can use a sell and rent back scheme?

Anyone can use a sell and rent back scheme, but in particular it is an option to consider if you are facing repossession or eviction. People can fall into mortgage arrears for all sorts of reasons, your employment or financial situation could change and suddenly you can no longer afford your monthly outgoings. Rather than struggling with your mortgage repayments, a sell and rent back scheme allows you to release the equity in your house, pay off your mortgage and outstanding debt and then continue living in your own home.

What are the benefits of using a sell and rent back scheme?

The biggest advantage of using a sell and rent back scheme is that you get to clear your debt, mortgage arrears and stop the repossession process, and then you get the advantage of continuing to live in the same property. This is particularly attractive to people who don’t want to move, uproot their family or move their children into a different area and different school. The process is quick and can be completed within weeks once the offer is accepted. It is also discrete so that your financial problems can be dealt with quickly and quietly.

What are the disadvantages of rent back schemes?

There are risks involved with selling your home and then renting it back. Firstly you will be selling your house at less than its market value, therefore it is important to consider other options and evaluate whether or not a quick-sell is right for you: considering the hassle and charges associated with a sale on the open-market, this could very well be a yes. Another disadvantage is that you may not have long-term security in your new tenancy. This depends on the sell-to-rent firm that you choose. Due to government regulation all firms have to offer an initial leasehold of five years, but after this there is no guarantee that you won’t be evicted.

How can I decide if a rent back scheme is right for me?

Selling your house and then renting it back is a viable option for people in severe financial difficulty. You should consider it if you are in mortgage arrears and facing repossession. Selling your property will stop the repossession process and allow you to pay off your debt. It could even be a short term arrangement in which you rent your home while looking for more permanent accommodation elsewhere: thus avoiding the stress and hassle of moving straight away. However if you are in mortgage arrears there are other options for example remortgaging or switching to an interest-only loan, so it is important to contact your lender and explore all the options available to you before making a decision. There are also independent advice services, which you can talk to about your financial situation and your interest in rent back schemes. Considering different choices that you have is the best way to make an informed decision and find out if a rent back scheme is right for you.

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