Charity concerns over sale and rent back firms
With many homeowners struggling financially due to rising living costs and high mortgage repayments, along with predictions that house prices could plummet over the coming year or two, many people may be thinking of selling up whilst prices are still high in order to avoid falling into negative equity. However, recent reports have shown how many homeowners are finding it increasingly difficult to sell their homes, as tight credit conditions and increased wariness over purchasing property continue to wreak havoc in the housing market.
For those desperate to sell in order to avoid repossession the problems could be serious. Difficulties in selling homes means that many may have to look at alternatives, and one such alternative that some desperate homeowners may end up turning to is sale and rent back schemes. This is where a sale and rent back firm purchases the home and then rents it back to the former homeowner. Although in principle this sounds like an ideal solution that enables homeowners to sell up yet still stay in the property some industry professionals have expressed concern.
One charity officials has said that homeowners that do take up this scheme often only get around half of the value of the home from the purchasing firm. Another problems is that whilst many sale and rent back firms offer an indefinite tenancy to the former homeowners some fail to live up to the promise, so the homeowner ultimately ends up having to move out of the property anyway, even after having sold the home for a fraction of its value.
One charity official recently said: “People are being ripped off. We are seeing people who are getting only 50% or 60% of the value of their homes instead of the 70% to 90% they should be getting. Many of the promises that are made that people can stay in their homes for the rest of their lives are not being honoured.”
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