6 Potential Pitfalls As a Homeowner of Sell and Rent-Backs (SRB )2103859

Selling your property through a sale and rent back scheme allows your mortgage debts to be initially cleared and for you to stay in your home. However, you need to keep in mind that if you decide to sign up to such a scheme, you will no longer own your home and could still be evicted if you fall behind with your rent. A list of some of the pitfalls can be seen below:

The company purchasing on a Sell and Rent-Back must be FSA Regulated, initial regulations were brought to pressure in July 2009 due to rogue property buyers. There are still a few businesses around doing SRB that are not controlled, check with the FSA register to be certain. For more detailed info go to this link.

SRB strategies on average include individuals attempting to sell their home, often at a large discount, market and rent back companies may mislead clients as to the true worth of their property in the hope of purchasing at a diminished price. If a private organization should go bankrupt after purchasing your home, the property will or could be repossessed by their lender.

You will be vulnerable to eviction, as your new landlord will have the right to terminate your tenancy at the end of the fixed term (often for five years).

You will have very little security of tenure after the initial fixed term of tenancy, that you agreed on sale, comes to an end. You will also pay market rent and be responsible for the usual rental increases in line with inflation. One of the large issues with SRB is a homeowner might of owned and lived in a certain property for a long time, being the owner there are very few limitations and any increase in capital appreciation is yours to maintain, when forced to market to a SRB organization due to financial issues, the homeowner now looses their increase worth in Capital appreciation over the years but worse yet they are now a tenant in their own home, meaning they have to abide by the normal regulations within a regular Tenancy Agreement.

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