What is Sale and Rent Back?
Published ¤ 12/06/2009
In simple terms, a sale and rent back scheme allows you to sell your property (usually at a price below market value) and rent it back from the buyer, at an agreed rental price that you can afford (no more than the true market rent). You may also have an option to buy the property back either at a discount in the future, or at a pre-agreed price.
Typically, Sale and Rent Back (SARB) schemes are for those who have no alternative but to sell their property quickly. Usually the property is sold below the market value, although most of the costs involved are avoided, such as estate agent fees, legal fees, survey fees, moving costs. It can offer the chance to completely clear all your debts. Also, with the option to rent the property, usually at a lower cost than the mortgage (and no more than market rent), you would not have to move house. In fact nobody need know that you no longer own the property.
These types of scheme can benefit a number of different people:
Those that are in serious financial difficulty
People who are finding it difficult to keep up the mortgage payments due to factors beyond their control (job loss, health reasons, high interest rate, etc.), don't have to move just because they can't keep up the mortgage payments! They will be offered a cash price to buy the property (usually below market value) and they can carry on living in it as a tenant until they decide to move on or buy the property back.
Those that need to emigrate:
When planning to emigrate, it can be a very stressful time, and trying to sell your home, and time the sale to coincide with your leaving can be almost impossible. You could sell the property through a SARB scheme and then rent it back until you are ready to leave.
People that have just got divorced:
Following a divorce, one of the parties may want to stay in the property, but have insufficient income to get a mortgage. Selling the property through a SARB could allow them to remain in the property, renting it until their income is sufficient to buy it back again.
There are also a number of disadvantages of SARBs, not least of which is that you sell your property for less than it is worth. For this reason it is essential that you get professional and ethical advice.
At PKS we only work with the most ethical and professional companies. We will ensure that your needs are looked after every step of the way.
If you think a Sale and Rent Back scheme may be an option for you, please call us on the number above, or click here to send us a message.
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