February 10, 2009
Be Wary Of Sale And Rent Back
One growing way to unlock equity in your home is to use ‘sale and rent back’ schemes, where unregulated firms buy people’s homes and rent them back to them to help them escape from their debt problems – this is something that should be viewed with extreme caution.
The Government last week launched an initiative to regulate the practice of sale and rent back, but there are still many problems associated with it. Some people are entering into sale and rent back transactions when this is not necessarily the best option for them – numerous tenants have being evicted as they are unable to afford the rent agreed. Also there is a lack of security for people entering into these agreements – landlords are imposing huge rent hikes resulting in tenants losing their homes when they then default on their payments
If this is something you have considered, or something that someone has approached you with, you must remember that there are options available to you. This might include negotiating with your current mortgage provider, selling your property on the open market, taking out a secured loan or even for older home owners using a regulated equity release product
Dean Mirfin, business development director at Key Retirement Solutions says: “In light of the current economic climate many consumers continue to struggle with their finances, and the danger of unscrupulous companies has never been so apparent.
“However, consumers should be aware that while the government has announced plans to regulate the sector full regulation is not expected until the second quarter of 2010. Sale and rent back is not the only answer for those looking to raise some extra cash. For consumers who are looking to release money tied up in their homes it is vital that they seek independent financial advice, this is to ensure they are aware of, and fully understand all the options available to them before entering into any agreement.”
SOURCE: KRS, 06/29/09
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