Sale-and-rent-back misunderstood…gaining popularity
Posted by hasnain on 11 July, 2008
Despite the adverse publicity surrounding the sale-and-rent-back sector, a recent survey has found that around 50% of homeowners would consider making use of such a scheme if they were under threat of repossession.
However, the research by financial website Fool.co.uk also revealed that homeowners who may opt for such a solution have low levels of understanding about the schemes.
Twenty-six per cent of respondents thought that a sale-and-rent-back agreement would give them the option to stay in their homes indefinitely.
Meanwhile, 15% thought they would receive the full market price for their home.
In reality, some sale-and-rent-back companies pay less than 60% of the market value for properties and tenancy agreements do not guarantee continued occupation by the previous owners.
In addition, if the sale-and-rent-back operator is unable to meet mortgage payments, homeowners who have become tenants can be evicted.
The sector has been expanding rapidly since the onset of the credit crisis and the Office of Fair Trading is currently investigating the industry, while various other bodies are calling for schemes to be regulated.
Last month The National Landlords’ Association, which represents private residential landlords, published guidelines for its forthcoming Code of Practice for members involved in the sale-and-rent-back market.
