- Sale and rent back
Sale and rent back is a form of property transaction involving theexpeditious sale of an owner occupier's residence to a landlord or property company and renting it back from the new owner.
Sale and rent back in the UK
In the UK, the residence is sold and rented back to the previous owner usually, but not always, on an
Assured Shorthold Tenancy.The purchae price is generally below market value, at a discount to the property's determined market value.
Advantages of this arrangement
The value of ones property can be released in a shorter time scale than that needed fora residential sale (no chain etc). In addition, the rent back option negates the need to move house.
Disadvantages of this arrangement
The downsides are that the rent back tenancy is that in some circumstances the tenant is only provided with a limited tenure tenancy, in some cases for as little as 6 to 12 months after which the landlord may seek possession of the property with only two months notice. In addition subsequent refinancing can see a new owner taking control, which adds tothe uncertainty of tenure.In recent years, the market for this option has swelled butthe openness or longevity of the companies operating in it can be questionable. In addition to short tenancy, the future of rent charged can be unknown.Such companies advertise in the same media as sub-prime lenders, supplementing this with door to door leaflet drops.
This method is not regulated in the by the UK FSA however voluntary regulation schemes are being developed by a number of organisations.
* [http://www.firsthomebuyer.co.uk/th-master.php?file=rent-back.xml How first home buyers can exploit a rent-back scheme to get a home]
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