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Sale and Rent Back (SRB)

Hi, Last year we had put our house on the market (detached bungalow, Torbay, 2 bedrooms, sea view, large new conservatory) to release equity for funding our business. Originally we intended selling the house and moving somewhere else, but since we couldn't find a suitable and affordable alternative nearby, we now strongly consider staying! We are fully aware of the problems associated with SRB. We learned that apart from private buyers only very few regulated firms are active, and that we will get less money than by a normal sale, but this may still be the best option for us, but we can't afford losing too much by the sale. We've learned that often 85% are paid on SRB, and sometimes more according to the status of the property. In our case, the property has been renovated recently (£42,000 spent), so no further investments are required. Can anyone recommend interested private buyers or a reputable firm? Or how could we find such buyers? We would be ideal tenants! Many thanks!

Asked on Feb 11 2017, Selling in Torquay | Report content

Answers (1)

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  • Hello, Yes, you're right... These days there are only a handful of sell and rent back firms in operation across the country. As the demand started to grow for this service in the early 2000s, a handful of unsavoury firms began to emerge who made false promises. For example, families were told they would be entering a long-term rental commitment only to be evicted shortly after the property was sold. Unfortunately, it took a few “bad apples” to stain the reputation of the whole “sell and rent back” sector and, in 2009, the Financial Services Authority (now part of the Financial Conduct Authority and the Prudential Regulation Authority) regulated the sector. Nowadays, sell and rent back firms are required to follow very strict rules and undergo regular checks by the regulatory authorities – aimed at giving homeowners better protection. Some examples include: - Not dropping promotional leaflets/marketing material through letterboxes; - Ensuring that homeowners can afford to enter into a rental agreement and this will not affect any entitlements to benefits; - Homeowners must be offered a “cooling-off” period of at least 14 days to make a decision; - Tenancies must have a fixed term of a minimum of 5 years; - An independent valuation of the property must be undertaken. The result of this regulation has been that the number of companies actually able to offer this service has decreased significantly. If you Google "Sell and Rent Back" a number of operators will appear. However, in the first instance, you should check that the firm is listed on the Financial Services Register via the link below. There are also a number of other alternative options worth considering: - Should there be a sufficient amount of equity in your property, remortgaging could be an option providing you are aware of the increased mortgage payments and the extended length of term; - Whilst it is important to be very careful and read the small print, there may be equity release schemes that will enable you to remain in your property; - Rent out your property and earn an income (to pay for a new place to rent) – in this scenario, you would need to request a “consent to let” from your mortgage lender or remortgage with a specialised buy to let lender; - Sell on the open market (i.e. through an estate agent). Although you mentioned you are struggling to find a rental property, perhaps you could find something temporary?

    Web reference: https://register.fca.org.uk/

    Answered on Aug 26 2018, Report content

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