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.

Britain’s spiralling debt crisis has led to a sharp increase in the amount of people taking out debt consolidation loans as a way of dealing with financial strife.

The lure of a single monthly payment and a lower interest rate has been too strong for many. On the surface, the benefits are obvious. Although the covering loan tends to be significantly higher than the amount needed for repayment, it usually has a fixed, lower interest rate. The pressures of keeping track of multiple creditors is also relieved by providing the debtor with a single debt source.

But if you dig a little deeper, the full extent of the dangers of debt consolidation become apparent. Many people are tempted into consolidating unsecured debt into secured debt, usually against their home. The loan is usually significantly higher than the debt, which means that failure to pay off the full amount puts the debtors home at risk. Far from dealing with the source of the debtors financial problems, debt consolidation loans only deal with the symptoms. In addition to a large repayment amount, many people are coerced into PPI (Payment Protection Interest), scaremongered into believing that this will aid them in the long term. In 2004 Lloyds TSB had their knuckle rapped by the Banking Code for allowing a man to accumulate £6,000 (a fifth of his final loan) in PPI
 
Before deciding upon a debt consolidation loan, make sure that you do your research into all of your available options. Banks will usually offer a payment plan to those in financial difficulties. This will freeze the debt but severely hamper the debtors credit rating. The debtor will also be prohibited from taking out any further credit form any source.

Sell and rent back is also an option. Although there is likely to be a noteworthy discount on the property’s true market value, there is the luxury of being able to stay in your own home whilst sorting out your finances. There will usually be a buy back option available in the agreement, which allows the client to purchase their house at the rate of the new mortgage. The real advantage of sell and rent back is that it negates the usual peripheral problems of raising capital via a house sale. As their is the option to stay on as a tenant, there will be no need to look for a new home, change schools for any children or even search for a new job.

The biggest advantage that sell and rent back affords, is the ability to stay in your home whilst consolidating debt. The peripheral benefits of this are numerous, as it prevents the need for a stressful move, changing schools for children or even a change of job. The long term benefits of preserving your credit history have previously been mentioned and the short term loss may be prudent when considering the loan term gains.

Sell and rent back companies usually offer a buy back option. The buy back is based on the new mortgage arranged by the company. This allows the client the option of once again becoming owner of their own home.

Unfortunately, the credit situation as it is has forced many people into a financial corner. Creditors have become more and more vociferous in their pursuit of monies owed, governed by the fear of the credit crunch. Repossession orders have increased greatly in the last couple of years, rising to over 120 per day in 2008. In reality, this is not desirable for the lenders as it prevents them from recouping their interest.

Until the market is willing to admit to a fall in house prices an adjust accordingly, the financial difficulties people are facing will not be going away anytime soon. Sell and rent back is not designed as business model designed to rob people of their homes. It evolved out of the pressures created by an irresponsible lending climate, looking to cash in on the massive growth in the property market.

Sell and rent back is not only for people who find themselves in financial difficulty. It is often used as a way of releasing equity from your home, insuring an expedient purchase after a divorce or consolidating debt. It can be open to abuse due to its current lack of regulation, but the reality is that it is in the best interest of the sell and rent back company to uphold it’s agreements. The sector is growing rapidly and will soon come under the jurisdiction of the OFT. Until then, if sell and rent back is an attractive option, ensure that the company you are dealing with is reputable, do your research and be sure you fully understand the intricacies of the business.

The small element of sell and rent back companies that do decide to evict tenants without notice are the same companies that tend to be reported on in the press. One of the advantages of a sell and rent back company is discretion. As a result, it is rare to find anyone who is willing to broadcast their situation and give a different account of their experiences. But the companies that do treat their clients badly are as a result of the de-regulated system and the sell and rent back sector will only profit from some form of regulation.

Make no bones about it, changing form a homeowner to a tenant is an incredibly difficult decision. Especially given the prevailing cultural preference toward owning ones home in the UK. Reports of dodgy companies evicting their clients and limited tenancy agreements do little to assuage peoples trepidation. What should be understood however, is that the limited tenancy agreement is as a result of the mortgage lenders and not the sell and rent back companies themselves. In reality, it would be more beneficial for the company to tie the client to a longer term lease and negate the need for new tenants. The company would also have the added incentive of tenants who are unlikely to let the house fall into disrepair.

Companies that do serve notice on their tenants after a period of months tend to be ‘fly by night’ and are just looking for a quick profit so quickly disappear. It is important to research the company that you are considering working with, to ensure that they are a dedicated sale and rent business. 

There is no getting around the fact that if you decide to use a sell and rent back company, you will be selling your property for BMV or below market value. The rate can fluctuate but the general rule of thumb is a minimum of 80% below market value. The initial loss is considerable but there are mitigating circumstance to consider. For example, if you end up in the position whereby a repossession order is completed on your house, it will be impossible to remove that black mark from your credit history. A poor credit history prohibits you from obtaining reasonable rates on any future mortgage…(cont)

The much publicised property slowdown and credit crunch has forced many homeowners into difficult situations. The cost of living has risen dramatically in the last couple of years and the credit crisis across the pond has only added to the mortgage problems that many people are facing.

As a result many homeowners are finding that their income is no longer significant enough to deal with the mounting debts that accompany their mortgage repayments. Unfortunately this often leads to the homeowner needing a quick sale in order to raise the necessary cash to cover their debt. In the present climate, a quick property sale has become more and more unlikely.

The market situation and new financial difficulties faced by the public due to the American credit crisis has resulted in a growth spurt of sell and rent back companies.  Their encroachment into the property market has not been welcomed by all, especially estate agents and debt consolidation companies. Homes sold under a rent back scheme do not involve estate agents, as the property is sold directly to the company specialising in cash purchases, which obviously bypasses an estate agent fee.

The cash purchase element of sell and rent back also infringes upon the territory of debt consolidation companies, as it would negate the need for a homeowner to take out a loan that is secured against their house.

There has been a lot of conjecture surrounding sell and rent back companies, especially in the press. As a new element of the market, there is still some doubt and suspicion regarding the motives of these companies.

The industry is not currently regulated. As a result, a small number of business are setting up with the intention of capitalising upon the difficulties of others by leading them to believe they have the rights of a tenant and then selling their homes from under them when a better offer comes along… (cont)

Insurance is one of those areas where it seems people are only too ready to stick their heads in the sand and adopt the ‘it’ll never happen to me’ attitude.  It’s not hard to see why this happens; for a start there are few of us who enjoy dwelling on the potential disaster that may or may not be around the corner, and in any case if money is tight insurance is often the first item of expenditure to be sacrificed.

One area of insurance that is particularly neglected is that of income protection, which provides cover should you not be able to meet your mortgage repayments due to ill health, disability or accident.  If you are a fit healthy 30-something, the chances that you will become seriously ill are probably remote but what people often fail to think about is that accidents can happen at any age.  It’s easy to think of ourselves as invincible but disaster can and does strike – thankfully rarely – so it makes sense to have a plan in place that will offer some sort of protection for you and your family.

When you are young your mortgage repayments will probably be among the most significant of your monthly outgoings.  If you find yourself unable to pay your mortgage, whatever the cause, you stand the risk of losing your home through repossession.  The number of repossessions is on the increase and mortgage lenders are unlikely to turn a blind eye in a situation where they can see little hope of getting their money back.

If you are already in this situation and you don’t have an insurance policy that will pay out, is there anything you can do?  With Property Rescue there is another option.  They will assess the value of your property and will make you an offer.  This means that you have a guaranteed buyer for your home that will allow you to pay off your debts.  “But where will I live?” I hear you ask!  Using the ‘Rent Back’ scheme, Property Rescue allows you to stay in your own home as a tenant rather than as the owner.  This means you don’t need to relocate, disrupt your family or move away from a neighbourhood that you enjoy.  Although you won’t own your home any longer, you won’t be threatened with eviction whilst you can afford to pay rent and if you think you are likely to be in a position where you can become a home owner again in the future, Property Rescue will give you the option of buying back your property at an agreed date and an agreed price.

Health and wealth are most definitely connected.  Poor health can strike at any time, usually through no fault of the person concerned, and yet it can bring a great deal of suffering to the individual and his or her family.  Don’t let illness or accident threaten your way of life more than it has to. 

Contact Property Rescue today to find out more about their Sell and Rent Back scheme.  Their experts are always pleased to have an informal discussion over the phone and will arrange to visit you and value your home at no obligation.

Did Christmas leave you with the type of hangover that can’t be cured by a couple of aspirins and a cooked breakfast?  If so, you’re not alone. 

The Financial Services Authority carried out a pre-Christmas survey that showed people were more likely to resolve to go on a diet or book a holiday in the New Year than try to deal with the bills they’ve run up over the festive period.  Apparently as many as one in ten shoppers were still paying back last year’s Christmas bills whilst running up further debt on their credit cards to finance this year’s purchases.

The post Christmas period is the busiest time for debt counselling organisations, whilst websites that deal with debt problems have a significant increase in visitor rates during January.  The Association of Business Recovery Professionals is seeing a record number of people getting into serious debt problems, with some of them having no option but to go down the route of insolvency or bankruptcy, running the risk of losing their homes and putting enormous strain on their relationships.

All these organisations stress the importance of having a debt repayment plan to break the cycle of debt, something that Property Rescue would endorse.  Even in cases where levels of debt are high, having a proper plan in place, which is agreed by both you and your lenders, is bound to help avoid County Court Judgements being served against you and will lessen the risk of losing your home.

Home repossession is a huge trauma to any family.  The disruption to normal life caused by children having to change schools, adults moving away from neighbours and friends, losing the support network offered by nearby family, and downsizing to a smaller property or inferior neighbourhood all take their toll.  That is all in addition to the financial problems, which are often far from over even once the house has been repossessed by the lender.  Credit ratings will inevitably suffer and new credit, including mortgages, will be hard to come by.

Even when debt problems seem overwhelming, it does not necessarily mean that you need to forgo the home you love in order to pay back what you owe.  Property Rescue’s sell and rent back plan provides one option of dealing with the situation, allowing you to stay in your home as a tenant after the sale has been completed and your debts have been paid.  Property Rescue always carry out discussions in complete confidence and promise to make a ‘no obligation’ offer on your property.

Don’t ignore debt problems because they won’t go away.  If you have levels of debt that are mounting and your home is under threat, call Property Rescue without delay.

As Christmas approaches more and more of us turn to our credit cards to provide the funds we need to finance our seasonal purchases.  Despite the concern emanating from retailers it looks as if we are set to spend record amounts again this year.  During the Christmas period consumers in the UK are expected to shell out an amazing £53 billion, approximately two thirds of which is likely to be made on plastic.

There is a boom in internet sales driven by more people getting online, more choice online, and lack of time to shop in the high street.  More than ten per cent of sales this Christmas are expected to be made online, equating to somewhere in the region of £5.6 billion, most of which will be paid for using credit or debit cards.

Using credit cards sensibly over the Christmas period can help you spread payments as well as provide a convenient way to shop that often gives you added protection through the card’s own refund or insurance policies.  But spending simply because you have plastic in your wallet can mean that you are storing up a crisis for the New Year.  Remember to check the interest rate your card offers: many cards carry very high rates of interest and are really only suitable if you pay back your balance in full every month.  Bear in mind that failure to pay means you will be running up a debt in interest charges alone, never mind the balance.  If you get into debt on your card you could find that your credit rating is adversely affected.

People with serious credit problems should take action and not bury their heads in the sand.  Credit problems don’t go away and have a nasty tendency to get worse!  Find out what your rights are and if there are any benefits you are entitled to (for example if you are unwell or unemployed) by contacting the local Citizens Advice Bureau.  Talk to your bank, mortgage company or lender as communication is always essential in these situations.  If you are considering the possibility of selling your home to pay off your debts, you don’t necessarily have to move out.  Property Rescue has a ‘sell and rent back’ scheme that allows you to remain in your home as a tenant after the sale has gone through.  Selling your property can be an excellent way of paying off your debts and give you the opportunity to move on with your life, but it isn’t right for everyone.  The action you take depends upon your level of debt and your personal circumstances.  Always take independent professional advice before you take action!

Property Rescue will be happy to talk to you in complete confidence about how to sell your home fast, and they will explain their ‘sell and rent back’ scheme.  They promise to make a ‘no obligation’ offer for your home.

The UK is a nation that is getting older by the day!  If that sounds like an obvious statement, take a moment to think about the impact that will have: more people taking retirement benefits, less people working to support the economy, and the average life-span increasing through better healthcare.

You don’t have to be an economist to work out that the balance will sooner or later tip with the result that pensions and other state benefits in retirement are likely to decrease.

Personal pensions are a matter of concern to the government who tell us we are not saving enough, nor are we starting to save early enough.  There is even talk of future generations starting a pension fund for their children before they reach school age!  The immediate problem, however, is that pensions can seldom be topped up sufficiently to make up for a lack of savings in our earlier working lives.  So if we are middle aged before we get round to thinking about putting money away for our retirement, we are likely to end up with a pension pot that is woefully inadequate for our needs.

The fact that people generally enjoy longer lives and better health than in previous generations means expectations are higher, with those in their seventies, eighties or beyond finding that they are fit and well enough to travel the world or take part in sports and leisure activities – all of which cost money. 

If your pension pot is sadly lacking but you are nearing retirement, your options may seem limited.  Once choice might be to release the equity in your home through Property Rescue's sell and rent back scheme.  There are a number of equity release schemes on the market directed at older people, not all of which are recommended by financial advisers, so no matter what course of action you are considering you should always take independent financial advice before you make your decision.  It could affect your future as well as the inheritance you may have to leave for your beneficiaries after your death.

Property Rescue make the equity release process simple and straightforward.  They explain everything to you in clear detail and take care of the paperwork and legal necessities.  They will not force your hand, and if at any time you decide that you don’t want to proceed, you are free to walk away without any obligation.  If you are considering equity release as a means of providing the cash you need in retirement, do some research into what’s available, consult an independent professional adviser, and give Property Rescue a call to find out more.