August 25th, 2011
Almost a quarter of all homeowners who have mortgages on their property are finding it impossible to move home or get a new mortgage deal. The Council of Mortgage Lenders recently revealed that around 827,000 homeowners owe more on their mortgage than what their home is currently worth. Along with this around 1.7 million mortgage holders have found themselves with less than 10 pc equity in their homes.
A lot of people who took out a mortgage with just a small deposit before the UK was hit by the credit crunch have become trapped in their homes thanks to house prices having fallen. Many are trapped thanks to expensive mortgages and are unable to lower their mortgage repayments. Some are even struggling to meet their mortgage repayments and considering options.
One of these options is to sell the property but with few people having money to buy, this is almost impossible, and of course means the buyer losing out. Another consideration is to enter into a sale and rent back agreement. This again means a loss as typically you sell the property for a lot less than its full value and rent it back for a fixed period of time. At the moment many homeowners are hanging on to the hope that the economy will pick up and house price proves will rise, but how long can they hang on?
August 4th, 2011
House prices have gone up a little in July by 0.2% which has taken the annual shift in prices to minus 0.4%. This is thanks to the sluggish demand for property which has been combined with a very gradual rise in the amount of properties coming on the market. The amount of transactions being made has remained at very low levels in recent months which is bad news for anyone wanting to sell their property and which may see an increase in sale and rent back agreements.
The economic climate is still very much in tatters and some have said that factors such as turning away from owner occupancy is playing a part in homes not selling. If you want to get a guaranteed sale of your home you can choose a sale and rent back agreement. This means you sell your property for what is generally around 70% of the full value of the property and then pay monthly rent to remain in it. The downside to this agreement is that the rental period is typically only fixed at five years. After this period of time there is no guarantee of the renter being able to continue living in the property.
Other economy experts have a brighter outlook and believe that the market will strengthen and the demand for house buying will improve. However only time will tell and if you have property to sell and need to sell fast, time is not on your side. If considering entering into a sale and rent back agreement ensure that you sell to a company that is regulated by the FSA. All companies should follow the guidelines of the FSA.
July 27th, 2011
With the economy still being very slow and people still suffering from debt problems there is the worry that more homeowners who are struggling to meet their mortgage repayments will consider looking in to sale and rent back agreements.
Sale and rent back agreements are one way that homeowners are able to remain in the property and sell. Typically when entering into a sale and rent back agreement the homeowner is offered far less than the full asking price. In exchange for this they get a guaranteed sale of their property and do not have the worry of repossession. On top of this they get to remain in the property as the tenant. However the downside to this is that the rental agreement is not for life. Typically the rental period is five years. After this tenants could be asked to leave the property.
With money being tight and companies in the sale and rent back sector realising this, it could lead to problems that were seen in the past. Today all companies in the sector have to be regulated by the FSA, but there are worries that new firms could crop up to cash in on those who are suffering from money problems.
July 14th, 2011
The UK economy is still in extensive care with the Bank of England reporting that unsecured credit has risen by £200 million in May 2011. Credit card lending also rose to £34 million which happens to be the lowest increase for more than 13 months. With many people still struggling financially there are fears that more people could turn to sale and rent back agreements if worried about their mortgage repayments.
Sale and rent back agreements are one way that home owners can get a guaranteed sale and remain in the property. However there are some drawbacks that have to be considered. While it is possible to get a guaranteed sale at a time when no one has money to spend, home owners are not offered 100% of the full value of their property. In fact often only around 70% to 80% is offered. Another downfall is that while you can remain in the property there is no guarantee that home owners are able to stay in the property for the rest of their lives. The typical rental period is four to five years. After this period of time tenants may be asked to leave.
If you are struggling to meet the monthly mortgage repayments there are numerous options to consider along with sale and rent back agreements. In the first instance speaking to the mortgage lender is advisable. You may be able to reach an agreement.
July 11th, 2011
Dodgy landlords in the UK will be put in the spotlight during a TV special by Jon Snow as part of the Dispatches TV series. With Britain fast becoming a nation of home renters as opposed to owners, the show highlights some of the worst landlords in the UK. One of the features is an elderly couple who went into a sale and rent back agreement after owning their home for more than 42 years, only to be asked to leave a short time later.
Another of the highlights shows how some landlords are getting away with renting out property that has anything from bathrooms that are damp to ceilings that are unsafe and in some cases are collapsing around the tenants. Landlords in the spotlight have even made threats to tenants and have evicted tenants with very little notice.
Snow is asking why more regulatory checks are not being made on landlords. The sale and rent back sector on the other hand is being regulated by the Financial Services Authority which it is hoped will be a change for the better for those considering selling property and renting it back. Snow uncovered one case of immigrants renting a make shift home in London and paying £40 per week to live in a garden shed. The program is using shock tactics to highlight the bad practises that some UK landlords are getting away with and it ends by saying that investigations will continue.
June 30th, 2011
With the economy still being unstable and many households struggling to make ends meet many are considering abandoning their properties by taking sale and rent back agreements. However this may not be the most suitable option.
Sale and rent back agreements may work out in some cases but homeowners considering this option have to take into account two factors. The first of these is that you are not offered the full asking price for the property and the second is the rental agreement terms. Typically homeowners are only paid around 60% to 70% of the value of the property and the rental agreement is usually 5 years. After this period of time there is no guarantee they are able to remain in the property.
Any homeowner who is struggling to meet their mortgage repayments may wish to consider other options before rushing in to a sale and rent back agreement. For instance as soon as problems arise it is importnant to contact the lender, as they may be able to help. Another options to consider is to re-mortgage the property for a mortgage with a lower rate of interest. If you do want to take the sale and rent back agreement option, ensure that you sell with a company that is registered and backed by the Financial Services Authority.
June 20th, 2011
Sale and rent back agreements are typically entered into by homeowners struggling to keep up with their mortgage repayments or who are already in arrears and cannot catch up. In simple terms the agreement comprises of selling the home and then remaining in the property as a tenant by paying rent each month. However it is essential that people understand the agreement and what it entails as they are not as simple as many believe them to be.
The first thing one has to understand about a sale and rent back agreement is that the company offering to purchase your property will not offer 100% of the full value of the property. In some cases homeowners get around 70% of the full value. Another very important factor is the rental agreement period. While you can remain in the property the rental agreement is typically fixed at a five year period. This means that any time after this you could be asked to move out of the property. Sale and rent back agreements are just one of the options that people with mortgage problems and arrears can look into. However it may not be the most suitable option. Anyone finding themselves struggling to meet their mortgage repayments should contact the mortgage lenders as soon as possible. It may be that an agreement can be made which would allow you to remain in your home. You may also wish to consider swapping mortgages, maybe to an interest only, to lower the monthly repayments. A sale and rent back agreement may work out but it is vital that you do your homework before rushing in to sell.
June 15th, 2011
Economic problems are still causing many problems for numerous families all over the UK. Many of these are struggling to keep up with their financial commitments including their mortgage repayments. The Council of Mortgage Lenders are worried that as many as 45,000 home may be repossessed next year if the struggles continue.
If you are one of the thousands who are having problems with finances and cannot meet your monthly mortgage repayments the first step should always be to talk to the mortgage lender. You may then consider other options such as re-mortgaging with lower interest rates or selling the property. You may also wish to consider a sale and rent back agreement.
A sale and rent back agreement may help you to avoid losing your home to repossession and still remain in it. However there are numerous considerations to make. One of the these is that you do not get the full asking price for the property. Another is that the rent back agreement is typically only for a fixed time of around 4 or 5 years. You may then be asked to leave the property.
All options should be considered and a sale and rent back agreement may not be the most suitable of these options. If you have decided to look into a sale and rent back agreement ensure that you choose a regulated company. Any company offering to purchase your home and rent it back to you should be regulated by the Financial Services Authority.
June 8th, 2011
The mortgage rescue scheme from the government was introduced to help people avoid losing their homes if they found themselves in trouble with their mortgage repayments. However the scheme came with high costs, more than three times the expected cost and has helped far fewer home-owners than expected. The overall scheme has cost £240 million since its launch in 2009. This scheme along with sale and rent back agreements were aimed at those who were struggling to meet their mortgage repayments.
This scheme relied on people applying for an equity loan to help with the repayments or they could sell their property to an housing association and then rent it back. The sale and rent back agreements worked on a similar principle but came from companies who had entered into the sale and rent back market.
The sale and rent back sector however began to receive a bad name when it was found that some companies were offering poor advice and not acting in the best interests of the home-owner. The Financial Services Authority is now regulating the sector in the hope that consumers will be treated more fairly. However despite the intervention of the FSA a few companies are still failing to meet the guidelines. If you are thinking of selling your home to rent it back, beware of all the facts surrounding the sale. Typically you will not full value for the property and the rental agreement is usually for a fixed period of four or five years.
May 31st, 2011
Sale and rent back agreements can be seen as a lifeline for those who are struggling to meet their mortgage repayments and fear repossession. However should you sell and rent back, as there are aspects that need considering.
One of the biggest pitfalls is that companies offering a sale and rent back agreement usually offer far less than the current value of the property. However there is the fact of a guaranteed sale providing both parties are happy to go ahead with the agreement. Another aspect is that although the indviduals can remain in the property after selling for cash, there is no lifetime guarantee. A typical agreement would allow you to remain in the property for around 4 years.
You also have to consider the fact that should you fail to keep up with the rental payments of the property, you will probable still end up having to leave the property.
A sale and rent back might be considered as an option for those in mortgage arrears or who are struggling with the repayments but there are other options that need considering too. Anyone considering looking into selling their home should ensure they choose a company that is regulated by the Financial Services Authority. The FSA took over regulation to ensure that all consumers got treated fairly after it was revealed that some companies were offering poor advice. A regulated company should sit down with you and make you aware of other options which may be more suitable. These could include re-mortgaging to take advantage of the lower interest rates at the moment and in the first instance speaking with the mortgage lender.