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1. If your property has a high value

 It is often difficult to sell and rent back (called sale and leaseback in the US) if you have a property of a high value. A high value in this case is difficult to quantify due to the differences in property prices nationwide but anything over about £250K outside of London may not work as a rent back.

This is due to the fact that the monthly rent for higher valued properties is often low compared to the properties price. This means that the rent back company would not be able to receive enough rent to cover the financing required to buy such an expensive house. Therefore, the only option for the rent back company would be to buy the property at a lower price so that the rent covered the cost in buying it. 

This is very mush dependant on the area you live in so please contact the rent back company to discuss. Once again, you should never pay them anything upfront so any advice they give is free and without obligation. It is therefore always worth asking questions.

2. If you plan to use Housing Benefit to pay your rent

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Firstly it is important to know that your lender can not evict you without a court order.

If you have been given a court order by your lender (received in the post) it usually means that other attempts made by you and the lender to overcome the arrears have failed. Some lenders are very sympathetic to borrowers who have got behind in their mortgage payments and may wait 6 months before applying for a court order. Some lender (of the ‘sub prime’ variety) will be all to quick to take late payers to court.

In order to start the eviction process the lender will apply to the local court to issue a ‘possession claim’ which will give you a date and time for a hearing in the county court. You should have at least 28 days’ notice of the hearing date. (Note a court hearing does not mean you will automatically lose your home.) Even if the court decides you cannot afford to stay there, you will not be evicted from your home on the date of the hearing.

What you need to do before the hearing

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If you have missed any payments on your loans you need to check if they are secured or unsecured on your home. If they are secured then they need to be dealt with urgently as the lender has the power to take possession of your property if they are not paid. We are going to discuss secured loans and what to do if you miss these payments.

Contact your lender

The first thing you do is you need to contact your lender to confirm the amount you owe and the steps you intend to take to pay them back. Many lenders would rather put in place a payment plan than go through a property repossession but there needs to be dialogue between the lender and the mortgage holder. It is very tempting (and common) for people in arrears to bury their heads in the sand rather than face up to the situation but the earlier steps are taken the better it will be. 

Most UK lenders are regulated by the Financial Services Authority (FSA) who have rules saying lenders must deal fairly with any customer who is in arrears. In practical terms each lender must:

• have a written policy on how to deal with customers in arrears
• allow customers to set up a payment plans which is realistic
• send out regular information about the arrears;
• not put pressure on customers through too many calls or letters.

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If you have missed any payments on your loans you need to check if they are secured or unsecured on your home. If they are secured then they need to be dealt with urgently as the lender has the power to take possession of your property if they are not paid. We are going to discuss secured loans and what to do if you miss these payments.

Contact your lender

The first thing you do is you need to contact your lender to confirm the amount you owe and the steps you intend to take to pay them back. Many lenders would rather put in place a payment plan than go through a property repossession but there needs to be dialogue between the lender and the mortgage holder. It is very tempting (and common) for people in arrears to bury their heads in the sand rather than face up to the situation but the earlier steps are taken the better it will be. 

Most UK lenders are regulated by the Financial Services Authority (FSA) who have rules saying lenders must deal fairly with any customer who is in arrears. In practical terms each lender must:

• have a written policy on how to deal with customers in arrears;
• allow customers to set up a payment plans which is realistic
• send out regular information about the arrears
• not put pressure on customers through too many calls or letters.

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Before you chose a Sale and Rent Back company you need to find out the following:

1. How long can I stay?

It is extremely important that you receive confirmation about how long you can stay if you plan to sell and rent back. If you have no set timeframe and want to stay for the long term it is important that you receive confirmation in writing to this effect. This needs to be in both a letter of intent and the tenancy agreement must include a right to renew clause.

2. Will the rent rise and if so, when and by how much?

It is important you get the answer to this question in writing. It is common for landlords to raise rents every year or two but some sale and rent back companies may have longer fixed rent periods in exchange for a lower sale price. Matching annual rent rises with inflation or a small percentage (i.e 4 to 5%) is common. Be wary of a company that says it will never raise rents as they are likely lying (unless they have bought your property for a very small percentage of its market value).

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This article is going to look at the typical sale and rent back process offered by the majority of specialist companies. This process will allow you to sell your property but stay in it Be aware that this is the typical process and may vary slightly between companies.

1. You contact a sale and rent back company via phone, email or online form and give them information about your property and situation.
2. They research your property based in the information given which may or may not include a visit to your property. If a visit is required then this will be free and arranged at a time to suit you.
3. hey contact you to make you a formal sale and rent back offer. This offer is normally made within a day or so of researching /visiting your property. This offer should include a purchase price as well as a monthly rental figure and should be confirmed by the company in writing.
4. You decide to accept or not accept the offer. If you accept the offer the Sale and Rent Back Company will ask you to sign an agreement confirming that you will go ahead with the offer they have made you. They should also provide you with any documentation you would like to see (i.e. the tenancy agreement detailing the rental figure, how much rent will increase each year, how long the tenancy is for). See a detailed list of the things you need to check at the end of this report.
5.  The Sale and Rent Back company will instruct their solicitors and the ones acting for you (chosen by them or by you if you request a particular company). You will then receive a Sellers Information Pack from the solicitors acting for you.
6.  A building surveyor will normally visit your home to check the condition of the property a few days after this. They will make sure they come at a convenient time for you.
7. Solicitors send you a tenancy agreement and other legal documentation to sign within next 3 to 4 weeks (quicker if a quick sale is needed such as in a repossession case).
8. When all documentation is signed and completed by the solicitors the sale will complete and your solicitor will pay off all your secured debts and release the remaining balance to your bank account.  You will become a tenant of the property on that day and the sale and rent back company will become your landlord.

Note that you should not be asked to pay for any valuations or fees during this process. If they are requested it is suggested you look for another firm – the majority of good firms will not charge for valuations. They should also pay the first £500 of your legal fees which in the vast majority of cases will be enough to cover the total costs. Remember, that the solicitor you choose will be acting for you impartially (even though the sale and rent back company may pay for them). Therefore, get them to check anything you do not understand. 

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This article assumes you understand the sale and rent back process and will discuss 2 scenarios where selling and renting back your property is most likely not the best solution. If you are in these situations it is advisable you look at the alternatives which are suggested.

1. If you can reduce your monthly outgoings 

Some people may find that they can reduce their monthly outgoings by consolidating their debts to a rate that is more affordable. This does not mean taking out more debts to pay off existing ones but getting all existing debts onto the best interest rate possible. If financial difficulties are causing you to ask yourself ’shall I sell my home and rent it back?’ it is often worth while looking at loan consolidation as a possible alternative.

This may allow you to keep ownership of your house but it does not guarantee that your future outgoings would be less than if you sold and rented back. If you are not sure what to do, it may be worth getting a rental quote from a rent back specialist (the good ones will give this free) and compare it to your potential outgoings if you consolidate your loan. This way you will be able to make a more informed decision.

2. When you want to get full market value for your property

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This article assumes you understand the sale and rent back process and will discuss 2 scenarios where selling and renting back your property is most likely not the best solution. If you are in these situations it is advisable you look at the alternatives which are suggested.

1. If you can reduce your monthly outgoings 

Some people may find that they can reduce their monthly outgoings by consolidating their debts to a rate that is more affordable. This does not mean taking out more debts to pay off existing ones but getting all existing debts onto the best interest rate possible. If financial difficulties are causing you to ask yourself ’shall I sell my home and rent it back?’ it is often worth while looking at loan consolidation as a possible alternative.

This may allow you to keep ownership of your house but it does not guarantee that your future outgoings would be less than if you sold and rented back. If you are not sure what to do, it may be worth getting a rental quote from a rent back specialist (the good ones will give this free) and compare it to your potential outgoings if you consolidate your loan. This way you will be able to make a more informed decision.

2. When you want to get full market value for your property

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