If you sell and rent back your home, you can lose the security of a permanent home. You might not get the best price for your property.
How sale and rent back schemes work
Sale and rent back schemes are promoted to struggling homeowners as an alternative to repossession. They also called sale and lease back schemes.
Sale and rent back schemes are operated by private, profit making companies.
You sell your home to a private company and rent it back from them. The price they pay you is usually less than the market price.
The company might then sell your home to a buy to let landlord.
You will probably be given an assured shorthold tenancy. It must be for a fixed term of at least five years.
You can be evicted at the end of the fixed term if your landlord gives you two months' notice. They don't need a reason to evict you.
Risks of sale and rent back
You may risk:
- being evicted at the end of the fixed rental period
- eviction before the end of the fixed period if you don't pay the rent or don't keep to other tenancy terms
- rent increases
- losing money on the sale price of your home
There's also a risk that you could lose your home if your landlord doesn't pay their mortgage.
Claiming housing benefit
You can apply for housing benefit to help pay the rent on the home you have sold. You must continue to live in the property.
The council may refuse to pay you any housing benefit unless you can show that the only way you could stay in your home was to sell it and rent it back.
Find out more about claiming housing benefit.
Search for a local benefits adviser through Citizens Advice if the council won't pay you any housing benefit.
Regulation of sale and rent back schemes
The Financial Conduct Authority regulates the conduct of private sale and rent back schemes.
The FCA must register schemes. It's a criminal offence for a scheme to operate if it's not registered.
Find out more about the FCA regulation of sale and rent back schemes.
Get advice about sale and rent back schemes
Always get independent financial advice before agreeing to a sale and rent back scheme.
You should also get advice if you:
- sold and rented back your home and are in dispute with your landlord
- are worried about your scheme
- think you were unfairly treated by a scheme
Consider other options
There may be other options available to help you keep your home.
Find out more about dealing with mortgage arrears.
Last updated 30 Nov 2016 | © Shelter
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