Take care when dealing with sale and rent back companies
August 15, 2007
Campaign groups and authorities are advising customers to exercise care when dealing with sale and rent back companies. These companies offer buy property from customers and then rent it back to then.
There has been an increase in the number of such companies that have sprung up in recent years. According to the reports, such companies do not have a lot of cash at their disposable in spite of having large amounts of assets that are worth a substantial amount of money.
Concern has been expressed over the fact that these sale and rent back companies are unregulated. The owners are often landlords that want to purchase properties at below market values and then sell them for higher prices, thus making a profit. Quite often a homeowner will sell the property to the company and rent it back only to face eviction after the space of a very short time. The landlord offers a guarantee of a short tenure, after which time he wants to sell the property for a large profit.
When dealing with unregulated companies, customers have very little protection available to them, which is why they need to be very careful in their dealings. According to one equity specialist ‘People should be aware they face losing their homes if they sign up to a sale-and-rent scheme. There are safer alternatives. Bona fide regulated equity release plans offer retired homeowners the chance to release cash against their homes but have complete security of tenure.’
He also stated ‘Sale-and-rent may seem attractive to those weighed down by debt and mortgage repayments, but with no regulator to oversee their activities; there is now a new type of landlord trying to take advantage of customers’ circumstances.’
Alan Wright
15th August 2007
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