If you are struggling to pay your mortgage and have further outstanding debts, you may have asked yourself if it’s possible to sell my home and rent it back ?
Can I Sell my Home and Rent it Back?
Despite being an option that is not a common occurrence, it is possible to sell your home and rent it back, through what is known as a sell and rent back scheme. You must be sure to use a reputable organisation though!
What are Sale and Rent Back Schemes?
Sale and rent back schemes are, essentially, schemes whereby you can sell your property to a cash house buyer and then become tenants of that property.
The sale and rent back scheme tends to attract those that cannot afford their mortgage repayments but do not want to move from their current home.
Although there are advantages to staying in the home you currently live in, particularly if it is a family home and you have young children, there are also numerous reasons why property sale and leaseback is not the most beneficial option, and most property buyers and financial advisors will encourage you to opt for an alternative means of dealing with your debt.
Why sell and rent back your home?
If you face losing your home, and it is extremely difficult for you to move elsewhere, you may want to think about opting for a sale and rent back scheme. Where possible, however, it is advised that you avoid this option.
While selling your property and renting it back can clear you of your current debt, it can lead on to further problems that can affect you both financially and in other aspects of your daily life. It is therefore advised only as a last resort.
What are the risks associated with sale and rent back schemes?
Sell and rent back schemes are risky. The first drawback to this option is the fact that sell and rent back firms tend to purchase properties for a lower price than their going rate which essentially means you will earn minimum money back on your house.
Selling on the open market often attains a higher price on a property than a sell and rent back scheme.
You can still be evicted from your home. If you break any part of your tenancy agreement, you can be evicted by your landlord, this includes both financial agreements, and agreements regarding the treatment of the property.
You can also be evicted if your landlord gets into financial difficulty themselves, or when your tenancy agreement comes to the end of its term.
Your entitlement to benefits may be affected. It is highly unlikely that you will be able to receive housing benefit once you have sold your property and started to rent it back. Other financial benefits may also be affected.
Rules for sell and rent back companies and individuals
If you are still certain that selling and renting back your property is your only option, you should do your due diligence to make sure you are selling to a reputable company that has been approved by the Financial Conduct Authority (FCA).
Before signing any sell and rent back agreement you should check that the company is logged on the Financial Services Register.
The FCA cracked down on the ‘sell and rent back’ market to eliminate bad practising companies. You should be aware that any legitimate companies that can offer a buy and rent back scheme must adhere to the following rules:
be aware that any company or individual offering you this scheme should not be dropping leaflets through your doors and should abide by multiple rules. These rules are as follows:
- Any organisation offering a sale and rent back scheme must NOT leaflet drop.
- Anybody selling and renting back to an occupier MUST be regulated by the FCA (Financial Conduct Authority) and must provide a tenancy agreement of at least five years to the seller.
- Sell and rent back schemes should not be promoted and anybody thinking about opting for one should have at least 14 days to make up their mind.
- Finally, sell and rent back companies and individuals should provide you with an independent value of your home, as well as conducting thorough checks to make sure the occupier can afford to enter into the sell and rent back contract.
The facts about selling and renting back
First and foremost, you no longer own your house which means that you no longer make the decisions about design features, the building itself and, of course, who lives there. In addition, your landlord can alter the price of your rent at any time, even during your fixed term contact.
Unfortunately, the truth hurts, and while you may be in awe of your home and can’t think about leaving it, perhaps selling it on the open market and renting another property may provide you with more disposable cash and offer slightly less risk.
Are you struggling to pay your mortgage or your debts?
It may be possible that a cash offer from Quick Move Now could help your situation, offering you a quick sale on your property to have more cash at your disposable. Why not get in touch with us at Quick Move Now? We can discuss further options to a sell and rent back scheme.
Other options than a sell and rent back scheme
We strongly advise you to consider the following points carefully before resorting to a sell and rent back scheme:
- Sell your house fast to a cash house buyer and pay off your debts, then rent elsewhere or purchase a smaller property.
- You’ll want to factor in the cost of selling your home and the moving process, where you will move to, the effects moving to a new home will have on your family, whether your debts are short or long-term, and perhaps look at ways to manage your money more successfully in the future.
Here at Quick Move Now, some customers have approached us with the question “Can you buy my house and rent it back to me?”. However, this is not something we offer.
While we can buy homes that are tenanted, the property should be vacant by the time of completion, as we list all properties we buy back on the open market.
Ultimately, it is generally agreed that, to sell and rent back is an extremely risky choice and is not generally recommended, therefore it’s not something we would encourage here at Quick Move Now.