When homeowners are struggling to pay their mortgage they may consider the sell and rent back scheme – this is a way in which you can sell your home to a private firm and then rent your home back from them as a tenant. It is normal that you may sell your home to this firm at a lower price than you would expect to sell it out right.
A private firm that may be willing to buy your property from you and then rent it back to you could be a company, a broker or a private individual. This was an extremely popular option for many homeowners tha t were struggling with mortgage repayments for their homes but now it is less common and in this article we want to explain why.
Previously there was no government or system looking over the sale and rent back scheme, this meant that there were risky private firms setting up and the sale and rent back schemes that were being created were not always in the best interest of the homeowner struggling with mortgage repayments, however the deals were very much in favour of the ‘not so honest’ private firms, companies, brokers or individuals.
By around 2005 the buy to let market had reached a boiling point where hundreds and thousands of ‘inspired amateur investors’ were pouring into the buy to let market as they had been sold the dream and hype of becoming millionaires over night with ‘no money down’ financing and instant remortgages.
However this is no longer an issue when it comes to Sell and Rent Back Schemes, if you want to be a ‘private firm’ for the scheme you now have to apply for FSA permissions to allow you to conduct a sell and rent back scheme business, also known as a SARB business.
For more details on sell and rent back be sure to see what rights you have.
We feel it’s great that this sector is now regulated as it means it is a win-win situation for the homeowner struggling with mortgage repayments and the private firms buying and rent back the properties.
If you have any queries about the Sell and Rent Back Scheme then why not give us a call, we are always happy to office free and impartial advice.