Learn More About Rent Back Schemes | Free Impartial Property Advice

Learn more about Rent Back Schemes

You may have heard about rent back schemes being offered by quick-sell companies, in which you sell your house for cash and then rent it back. This is targeted at homeowners facing repossession or mortgage arrears. Here is everything you need to know about rent back schemes, the law and how you can make sure you get the best deal.

Are Sell-and-rent-back schemes regulated by the government?

Yes. Until 30 June 2010 they were not regulated, which of course meant choosing a sale-and-rent company was extremely difficult, but thanks to pressure from advice organisations the Financial Services Authority now regulates all private sale and rent back companies. Before you decide on a quick-sell firm to buy your house, you should check that they have been approved by the FSA.

How is government regulation helping to protect people against the dangers of sell-and-rent schemes?

While selling your home and renting it back can be a good solution to debt, companies only interested in their own profits could take advantage of people in a financially vulnerable position. Government regulation is helping though to minimise the dangers of this happening. They have introduced a 14 day cooling-off period for you to have time to get advice and inform your decision making. Companies are also obligated to check whether or not the scheme is affordable and appropriate for your situation, whilst making you fully aware of the risks. To protect home owners the tenancy you are offered by a sale-and-rent scheme must have a fixed term of at least five years.

What happens if I fall into rent-arrears after I have sold my house?

To ensure that you are treated fairly by your sale-and-rent company the government has stipulated that you should not be charged monthly arrears charges once you have made an agreement to repay your rent-arrears. Any payments you do make should be put towards paying rent missed rather these arrears charges, which can be paid at a later date. Finally the government has stated that eviction should only be a last resort once all other options have been exhausted. If you do run into problems once you have decided to sell your house then rent it back and you think that you have been treated unfairly, you can also complain to the Financial Services Ombudsman.

Where can I find a sell-to-rent scheme that suits me?

If you have decided that sell-to-rent is the right option for you then there are certain things that you can do before contacting companies. Firstly get an independent valuation of your house: this gives you a good comparison to any offers given by mortgage rescue schemes. You should also contact your mortgage lender as some operate sell-to-rent schemes themselves or contact your local council to find out if there are any reputable sell-to-rent companies in your locality. If you decide to use the Internet to help you search for a sell-to-rent company, get a few different quotes to compare; many websites can do this for you so that in a short amount of time you can do a lot of market research.

How can I check I am choosing a good sell-to-rent company?

It is good to do some background research into the company you are considering. Check their website, office address and how long they have been operating for. You can also check they are authorized by the government by looking at the FSA register and you can use the Companies House to ensure that the sell-to-rent company you have chosen is financially stable. Finally getting testimonies from other customers that have sold their houses is a good way to gauge how the company operates: request a contact number from a referee and a current tenant who has been through the process.

(c) Copyright - Kieron Bolton. All rights reserved worldwide.