Property Rescue Blog

The UK property market is currently going through its biggest period of uncertainty for almost 16 years. As a result, there is a lot of jargon flying about the press concerning the implications of the property slowdown, the various reasons why it may be happening and how the market and the Bank of England are trying to combat the lull.

One of the major issues currently being discussed at the moment is the rise of sell and rent back companies in the sector. As a relatively new concept, it is open to much suspicion, especially as it tends to blur the lines of the different market areas.

The basic idea is that a person sells their home to a specialist cash buying company and then rents back the property at local market rent. Although debt management is the most talked about motivations for this, there are a number of different reasons that people decide upon this course of action, including divorce, equity release, expedient sales or emigration.

There are advantages to sell and rent back for all of these motivations. Cocerning debt management, the ability for a sale to be completed within 48 hours is advantageous when trying to stop repossession. Property Rescue is also able to eliminate up to 80% of all unsecured debt without using any proceed from the sale, due to a dedicated Debt Management Department, a service offered as part of the package.

With regards to equity release, the main benefit over traditional equity schemes is the ability to unlock 100% of the property’s equity. In addition, most equity release companies only deal with people approaching retirement age, due to their position on the property ladder and equity amount in their home.

The main disadvantage of course, is that the offer on your house will be below market value, usually around 80% off the market price. Obviously this can be difficult for many people to reconcile, but the reason sell and rent back has continued to grow is that although it seems a heft price to pay, the advantages further down the line for peoples finances outweigh the initial discount. Preserving credit ratings or offering a divorcee the opportunity to stay in their home instead of facing a move, tend to take precedent in this situation.

The unregulated nature of the market does it leave it open to unscrupulous traders. It is vital that all efforts should be taken to avoid these companies. A little bit of research usually exposes crooked brokers.

It is vital that when facing a decision that effects your financial future, all avenues are explored. If deciding that sell and rent back is an option that you would like to investigate, ensure the company you are dealing with a reputable and experienced in your situation.