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Reasons to Sell Your Property and Rent It Back

If you are having financial difficulties then you are not alone. In the first few months of this year thousands of people enquired about debt management at Citizens Advice Bureau. Last year tens of thousands of people entered individual voluntary arrangements (IVAs) or went bankrupt and hundreds of thousands of Brits missed at least one mortgage or credit card payment. With interest rates on the rise, the cost of servicing a mortgage is getting higher, and UK consumers also carry a whopping £1 trillion of debt. So it's no surprise that many people are looking for creative solutions to solve their financial problems. One such solution is a sell and rent back scheme.

As the name suggests, a sell and rent back scheme is where you sell your home to a company and rent it back from them. There are several advantages to this. With a typical house sale, you put your house on the market, wait several weeks for it to sell, wait several more weeks for the sale to complete and pay legal fees and estate agents' fees. In addition, there's no guarantee that the sale will complete when you need it to - or at all. This uncertainty is not helpful if you are facing financial difficulty. If you are relying on a house sale to clear your debts, then you need a quick property sale. The advantage of combining this with a rent back scheme is that you can clear your debts without having to leave your home.

Typically, companies that offer sell and rent back schemes pay your solicitor's fees and cover the cost of valuation. Once a market valuation has been set, the company will offer around 80- 85 per cent of the value of your property as a cash sum, which you can use to repay your debts, mortgage arrears or credit card bills.

At the same time, you will sign a tenancy agreement, typically for a year and will pay a month's rent in advance. You will then rent your home from the company. Generally, with these schemes you can continue to rent your home. In the initial period, the rent is fixed at market rental, but it will rise in line with other rents as the years pass. Once you have sold your house, buildings insurance, boiler servicing and other maintenance tasks become the landlord's financial responsibility. All you have to worry about is paying the rent, utility bills and council tax.

Sell house and rent back schemes also offer a way to release cash. In both cases, you release the equity in your home. With sell and rent back you become a tenant and have no mortgage to pay. With most sell and rent back schemes, you will receive an offer on your property within days and the sale will complete in a month or less.

Risk Warning: If you enter into a sale and rent back agreement you are unlikely to get the market value of your home and, as a tenant, may only be able to remain there for a limited period. There may be other options available. Please ask for a Key Terms Statement.

We do NOT offer the sale and rent back arrangements anymore. These arrangements are no longer authorised by the Financial Services Authority. No company can legally offer you a sale with a rent back. However, if you’re interested in selling without renting back, please get in touch with us today as we will be able to make you an offer.

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