The Sell and Rent back schemes have now become one of the many solutions for those who want to escape the misery of debt and mortgage payments meaning a life free of debt.
There are pros and cons of selling your house and renting it back.
The obvious pros are:
1. You will be debt free
2. You do not have to be concerned about the maintaining the fabric of the building, - if the chimney falls call the landlord
3. There will be no more building insurance payments
4. Your homes gas supply will be fully serviced each year.
The more subtle ones are:
1. No body needs to know that you have sold your house
2. Your children can go to the same school and have same friends
3. Your life carries on as normal – but you are debt free
In essence you may have sold the bricks and mortar but you still have your home around you.
The biggest gamble anyone takes when selling to rent back is that you are typically selling your house to a complete stranger. This could have many long term ramifications and the questions you should ask are:
How strong is the buyer financially?
The likelihood of a buyer being financially broke and buying your house in this climate is probably negligible as the lenders are a lot more stringent about the people they lend to. However, there is always one that will slip through the net and if they become financially unstable then the probability of an eviction begins to loom and you are then at risk of losing your home.
Is the buyer going to evict you after they have bought the property?
This again is a question we get asked a lot – the answer is that when a buyer buys and rents back they do it for the long term. The buyer has seen the house, how the seller lives and knows that they will maintain the home in the manner that they are accustomed to and see it has a solid future investment.
Is the rent going to be more than I can afford?
Sell and Rent Back is based upon affordability otherwise they do not stack up for the buyer or the seller. The rental amount is agreed well in advance of the purchase so that you know exactly where you stand. Increases are then set on yearly inflation figures, which is anything from 3-5% increases per annum.
These are always important questions to consider and you must ensure that you have carried out your research on your buyer before you progress with the sale of your home.