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Old 21-06-2007, 07:33 AM
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Dragonlady Dragonlady is offline
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Lizzie has been busy spotting some really good articles. Thank you Lizzie.
If you posted these I could tip your scales, I will tip your scales anyway

Should you sell then rent back your home?
Simon Lambert, This is Money
20 June 2007

The double bind of bad debts and rising interest rates has led to a growing number of sale-and-rent-back property companies targeting overstretched homeowners.
SELLING UP: Sale-and-rent-back deals should be a last resort for cash-strapped homeowners
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Sale-and-rent-back agreements allow homeowners to sell their property at a discount price to a company, which will then rent it back to them at market rate.
Despite the fact that they will sell their home for tens of thousands less than it is worth, the advantages of sale-and-rent-back may seem attractive to borrower in arrears, especially as deals are advertised on the basis that they can be conducted swiftly and quietly with no need to tell neighbours or even family.
But there are major drawbacks to dealing with these unregulated firms, some of which may be looking to turn a quick profit from others' misfortune.
Here is what you need to know about the new trend:
What is sale-and-rent-back?
Sale-and-rent-back companies purchase people's homes for less than the market value, typically 70% to 80%, generally paying all fees and costs, and then rent the property back to the original owners at market rent, or sometimes less than their mortgage payments if these were lower than the rental value.
Homeowners can use the cash to settle their existing mortgage and any outstanding debts, while remaining in their own home. Some companies offer the opportunity to buy the house back at market value at a later date.
Why would someone choose sale-and-rent-back?
Selling your home for tens of thousands of pounds less than it is worth is not an attractive prospect. But those fearing repossession due to mortgage arrears and facing large personal debts may see it as a simple way out of trouble.
Companies heavily promote their ability to complete in a week if necessary, their payment of legal fees and willingness to help customers sort out their debts.
Most sale-and-rent-back operators claim vendors may only get 85% of their property's value by selling on the open market and say they will pay between 70% and 90%, depending on a surveyor's valuation.
Firms that offer sale-and-rent-back also promote discretion, saying that neighbours need not know there has been any change in status, while families can stay in the same home and children can continue to attend the same school.


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What are the disadvantages?
The biggest drawback is that homeowners are selling their property for less than it is worth and will then end up paying the equivalent of the new owner's mortgage.
Sale-and-rent-back and quick sale companies deal with those needing to settle debts, swiftly relocate, avoid a property chain breakdown, or who have below-par homes that are difficult to sell. These all help companies to negotiate with sellers and drive down the price.
The quality of service from sale-and-rent-back firms can differ widely, with some more established operators seeking to protect their reputations but others simply out to make a quick buck. The services are unregulated and most offer no security in terms of long-term tenancy or rent levels.
In the worst case scenario, a previous owner could find themselves evicted at the end of a six or 12-month assured shorthold tenancy having sold their home for a bargain price.

What is the problem with sale-and-rent-back valuations?
Companies offer homeowners a percentage of the value of their home say this compares favourably to the percentage of an asking price they would get if they put it on the open market.
However, this comparison is disingenuous. According to property information group Hometrack, the average sale in England and Wales in May was at 95.7% of asking price, while the region with the lowest average sales to asking price percentage was Wales at 94%.
Most agents' valuations will take into account a 5% sales price reduction compared to asking price - but sale-and-rent-back firms' valuations will be done by a surveyor who will simply state the market value, i.e. what it could be sold for tomorrow. A 15% to 25% reduction on this pushes a home's value down even further.

What are the other choices?
Would you sell your home for 50,000 less than it's worth? This is what sale-and-rent-back companies would be asking the owner of a 200,000 property to do if they purchased it at 75% of its value.
If you have to sell up and move then accept that fact. If you need a quick sale due to debt problems, speak to your mortgage lender. It may be able to find a cheaper deal, switch you to an interest-only loan, or delay repayments to give you time to sell.
It is then possible to put the home on the open market at a low asking price and try and get the best offer possible. If you have to move to a different property, so be it. Mortgage lenders do not want to repossess homes, it is a complicated and expensive process for them and they are unlikely to get back a property's true value.


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Who are the sale-and-rent-back firms
Companies that offer sale-and-rent-back have typically grown from those offering quick-sale services and see offering to rent the property back to the owners as a way of getting a property for a bargain price with a guaranteed tenant.
The internet boom has allowed companies to set up at very little cost and reach a much wider audience than putting classified ads in newspapers and magazines. Some are part of wider property groups, others are simply small operations run by canny buy-to-let investors who are turning to these arrangements as bargain property becomes harder to find. Anyone considering sale-and-rent-back should first explore all other options. If they decide to push ahead, it is essential to take great care in getting a number of quotes, check out the company dealt with and ask serious questions about tenancy details and rights.
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Old 04-09-2007, 06:20 PM
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Hocuspocus Hocuspocus is offline
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Nope, think would prefer to cut my loses, never been good at letting someone else be in control of my situations, and never knowing if you were going to be kicked out anyway, its a lot of upset with an extra knock just as you may be getting settled again.

i would rather buy a Tent
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