Property Rescue Blog

Sell and Rent Back with Property Rescue involves a 4 stage process. Quick. Easy. And effective.

It’s that time of year when we all become frazzled with the chores of Christmas, the biggest of which is undoubtedly the Christmas shopping.  Finding original presents for everyone can be a real nightmare and when money is tight the whole task is even more fraught.

Shops are reporting that trade is light this year – no surprise in view of the state of the economy and people’s fears over job losses.  Those who have been unlucky enough to already lose their jobs will be looking to cut costs wherever they can, whilst others, such as the thousands employed by Woolworths, will be looking to the future with trepidation.

It is tempting to put the Christmas purchases on the credit card and worry about the bill later, but the income of many households has fallen and cannot be compared to this time last year when we were all spending more freely.  Those who have been unable to keep up with repayments on their credit cards will find that the interest will mount up considerably and if the debt cannot be controlled, interest will become payable on the interest.

Of course, the best policy is to use cash, not credit, for Christmas shopping.  But when we do use credit cards, keeping interest payments under control is something we all should try to do.  The nought per cent deals are few and far between, but it’s still worth shopping around to make sure you are not paying more than you have to. 

Bad debt will affect your credit rating and this will make it difficult to get future loans or credit.  If debts threaten to get out of control you need to take action.  Working out your monthly or weekly budget is always the first step and there are free services that will help you do this.  Be honest with yourself about how much you spend each week – even slight changes to your lifestyle can mean that you make savings.  Being aware of what you spend and how you spend it is a key part of controlling your outgoings.  It may be possible to manage your debt by agreeing to pay off smaller amounts of your loan or extending the time period over which repayments are made.  Always talk to your lender(s), as ignoring letters and phone calls will only make your situation worse.

Financial advisers generally regard bankruptcy as very much a last resort.  In some cases it is unavoidable but it is not a ‘soft option’ and has many repercussions.  One way of reducing or eliminating your debt could be to sell your home.  This may seem a drastic step, but with sell and rent back agreements you could stay in your home as a tenant rather than an owner.  Make sure you know all the terms of the contract before you sign up to any such scheme, and deal with a reputable company such as Property Rescue.

For information on sell and rent back, contact Property Rescue.  One of their advisers will talk to you in complete confidence and without obligation.

The Treasury has announced big spending plans to reinvigorate the economy.  A total of £12.5 billion is said to be on its way to consumers but the question on everyone’s lips is, will it work?

The Chancellor, Alistair Darling, has announced that VAT will fall from 17.5% to 15% with effect from 1 December 2008.  This short notice has sent politicians and businesses into a spin (and doubtless caused a few headaches at HM Revenue & Customs too!) due to the changes that will need to be put in place when the new rate comes into force next Monday.  The 15% rate will mean that we can buy goods that would have cost £550 for just over £538.  Remember, this applies only to goods that are subject to VAT in the first place.  Goods that are zero VAT rated or rated in a lower band will remain unaffected by these changes.

There is no question that shoppers are feeling the pinch.  In fact ‘pinch’ may be an appropriate word as media reports show a rise in shop-lifting.  Some towns and cities are claiming that theft from stores is up by a quarter and it’s not the luxury goods that are disappearing; it’s everyday basics that people need but feel they can’t afford.  So will an approximate £12 reduction in a bill of £550 make much difference?  That’s just £2.50 in every £100 spent on goods carrying full rate VAT – hardly enough to get excited about.

There is also to be a new higher rate tax band for big earners, whilst those earning less than £20,000 will see National Insurance contributions cut.  However, the vast majority of people earning an average wage will have to pay 0.5% more NI in the next financial year – enough to cancel out the VAT decrease one would have assumed!  There are some other measures that will make life easier for a minority of the population but for the average ‘man on the street’ it is hard to find much cheer in the pre-budget speech, especially after such a big build-up. 

Bank lending restrictions, the short supply of mortgages and falling house prices seem much more significant in the current climate.  Mervyn King, Governor of the Bank of England, has this week hinted that the government may need to force banks to start lending again if the situation is to get any better.  Many lenders are demanding 25% deposits before they will grant mortgages and although property prices are dropping, that’s a level well beyond the reach of many first time buyers.

The VAT reduction may be welcome news in so far as it goes, but whilst house prices are coming down and the recession starts to bite, people will feel worse off and that will affect their spending patterns on the High Street. 

For families who are struggling, the pre-budget report is unlikely to bring about substantial changes to their circumstances.  If you are in danger of losing your home through repossession, talk to Property Rescue about their sell and rent back scheme.  Selling to Property Rescue would allow you to stay in your home as a tenant and get rid of the repossession threat hanging over you. 

There are many people trying hard to balance the books and stay on the right side of their bank and/or lender, but sometimes that simply isn’t possible.  Don’t let repossession ruin your life – talk to Property Rescue in complete confidence and without any obligation.

We sometimes forget how much cash is tied up in your home. Releasing this cash could prevent repossession and aid some financial problems you are facing. It is all well and good relying on the value of your house to go towards a bigger and better home – if you can afford it. In the current economic crisis and the struggling property market, it is no shame to admit that your current home is presently beyond your means. So why continue struggling to pay the mortgage payments, and interest payments alike which you cannot afford. House repossession is a very real possibility in this situation, one which could be avoided. Selling your house, to either move in to the rental market, or to downsize could be the answer you are looking for.

Does it really matter how many bedrooms you have? How many guest rooms you have? If you have that landscaped garden you were always after? Or is it better to go to bed at night knowing that you can afford to pay the bills to live in your home, even if it is slightly less modest.

Releasing the equity in your home can stop repossession, and allow you to use some of the money to provide a smaller property. Alternatively, releasing the equity could provide suitable funds for various schemes, including sell and rent back, sell to rent, or simply to sell outright.

With a sell and rent back scheme, the equity can be released from your home. You can ignore the added problems of moving, and you can remain in the property that you have made home. Furthermore, the speed at which such a scheme can operate is much more efficient as there is no searching for a new property, waiting and hoping for a genuine buyer for your property.

In this scenario, although the rental fees may be slightly greater than the mortgage fees, they will be short term, and the lump sum of equity will be used to pay off debts, or can sit in the bank counting the interest.

This works in a similar way to selling your property to move in to the rental market, as the equity released from your home can be used to help finance other ventures, pay off debts, or be used as a deposit on a new home.

A major re-occurring problem is the fixed-rate mortgages coming to the end of their term. Which as a result can greatly increase mortgage payments practically over night. The monthly costings are completely out of proportion, and if your salary cannot absorb the added charge, then you can very quickly gather up debt.

This is also apparent in interest only mortgages. In these instances the property is effectively never yours, so an advantage to watching property prices rise is to release the equity in the property. Thus reaping the rewards of an increase in value, and either re-mortgaging or renting the property back – either way, you can feel those financial strings pulling a little less, and prevent any form of repossession.

With the property boom having come to a grinding halt, there has been a continual decline in inflated prices. From Newcastle to Manchester, and Birmingham to London, it seems no-one is clear from this slump.

Rumours have been circulating for a while now over the prospect of either selling your property to rent it back, or selling to move in to rented accommodation.

With the property market fluctuating, it seems smart to sell when the market is riding a wave, and buy once this boom has crashed. However, this takes serious knowledge of the property market and strong forecasting. Something perhaps better left to the experts.

This is because; you have to take in to account, the cost of moving (transportation / fees, etc) and the monthly rental fee. It is normally the case that a mortgage payment is lower than a rental payment, not to mention the fact that property prices will have to drop a reported 4% to make selling and renting worthwhile.

The gains from selling to rent can be huge, and have proven to save buyers around 30%. How? As the market has begun to fall, house owners have sold their property, moved in to rented accommodation, only to emerge back on the property ladder a few months later at a ‘discounted’ rate of around 30%.

Genius. Well it can be. The market can be futile, and unpredictable. For all the ups and downs we are subject to, property is genuinely a sound investment in the long term. Sit there long enough and you should be seeing a handsome profit. Nonetheless, I think we would all be happier if there were a way to lower our mortgage, move in to a bigger property, or simply increase the figure in the bank.

Selling and renting is building up quite a reputation for itself, and rightly so. There are however, some pitfalls of which you must be aware. Renting normally requires signing a minimum 6-month contract. If the market does suddenly rise, you may be a few months behind watching prices rise whilst you are contracted to rented accommodation. Naturally if you have the means to support both payments, then you could always rent whilst looking for a ‘bargain’ knowing that once one comes along, the deposit is happily waiting for you in your bank account.

Not only this, but we never truly know how long the slump will last, or whether it is actually a slump or just a slow down. As a result of this, it is important to understand the elements before subjecting yourself to them.

Buying and selling property involves a major decision, and for many of us it will be the biggest decision we ever make. If you see moving as an annoyance, and are not particularly optimistic about property prices, then perhaps think of other solutions – if you can find one. But, if you don’t mind the thought of moving twice, and have a view about where the property market will go, then perhaps selling and renting is for you.

In recent times, it seems as though we cannot turn on the news or open a newspaper without being further reminded about the dire situation our country finds itself in.

With the cost of inflation constantly rising, generally at a faster rate than the interest rate, it seems as though nothing is 'worth' its price any more. Everyday expenses are a becoming a genuine concern to more people than not as the cost of petrol, gas, electricity, food, utilities, and council tax amongst others rise. This is happening at the turn of the property market when house prices are slumping and the economy looks weak. The number of vulnerable people is rising, from first-time buyers and disabled people, to the unemployed and buyers whose fixed interest rate is expiring , or has expired. The ensuring result is expenses being greater than earnings, and without any savings it doesn't take too long for financial trouble to appear over the horizon. The same is for people with savings; how long can you support yourself with your savings; how much of your savings do you want to lose during this market.

The home-owners most at risk are those who have either no equity in their property, or those at risk from becoming unemployed. Unemployment is a serious issue, with unemployment figures gradually rising, and are currently at their highest in over two years.

Is repossession the only result?

Well there is some good news in the offer of some schemes available to home-owners. There is the sell and rent scheme, and the sell and rent back scheme. Both can provide the financial stability we all crave, but with different results.

A sell and rent scheme is an option for home-owners to sell their property, releasing the equity in their home, and move in to the rental market whilst the current property instability corrects itself. If property prices continue to fall, then the home-owner could emerge back in to the market at a lower level, either buying a similar property at a lower price, or simply a smaller less expensive property at a lower price than what the market was at a few months ago. The result is obviously to stop repossession and allow some greater financial freedom.

A sell and rent back scheme is similar in the sense that you sell your house, releasing the equity in your home, and begin renting. The difference here is that you will be renting your own house back. Therefore you do not have to endure any moving costs / time, or any time spent searching for new properties.

Obviously we all aim to control our own finances, whether this is in the form of no debt, and in the more realistic form of controlled debt. Neither are easy, and there are many factors out of our control. However that doesn't mean these are unrealistic targets. No-one wants the prospect of repossession hanging over their heads, nor should anyone have to go through what can be a very confusing and upsetting time. There are ways around repossession, and options to stop repossession occurring. What we must remember is to be smart, i.e. get

Unemployment figures released this week show 1.79 million people out of work in the UK (measured between May and August 2008); the highest number since the 1990s.  This figure is expected to increase to 2 million by the end of the year, with many analysts predicting further rises during 2009. 

The construction industry has been hard hit as work slows or stops completely on new builds throughout the country.  As well as affecting those directly involved in building trades it has a knock on effect for suppliers and manufacturers.  Additionally, the manufacturing sector – already weak in the UK – has recorded an all time low in the number of people it employs.

The UK is a nation of small businesses, many of which are sole traders or employ under 10 staff.  It is these that are affected most immediately when work dries up.  Without large asset value or access to funding they can find themselves in a cashflow crisis that can bring them down within a few months or even weeks.  This is compounded by the fact that nervous banks are reluctant to renew loans or allocate new investment, especially to businesses that are struggling. 

For every ‘statistic’ whose business goes under or who is laid off due to lack of work there is a personal story of hardship.  Many of these are homeowners with mortgage payments that become difficult – or in some cases, impossible – to meet.  The minority will have insurances that meet the cost of mortgage interest, but those who default on their repayments will increase the burden of an already serious problem for the lenders.  As unemployment rises there is sure to be an increase in the number of repossessions taking place.  With house prices continuing to fall, some lenders will find themselves having to accept a sale price that is lower than the outstanding mortgage.

At a difficult time for homeowners it is reassuring to know that there are options open, even when the situation looks bleak. 

Lenders will encourage you to talk to them about making different arrangements whereby you can meet your payment obligations.  For example, they may be prepared to lengthen the term of your loan, or accept smaller (or interest only) payments for a period of time until you get back on your financial feet.  Always communicate with your lender when times are hard.  They will be much more responsive to you at this stage than if you bury your head in the sand until the situation is critical.

If you simply can’t meet repayments, you might want to explore other options that will allow you to stay in your home.  There has been some negative publicity about the less reputable companies that offer buy and rent back schemes.  Property Rescue has a sound financial backing.  Their experts have years of experience in many aspects of the property market and will explain all the options to you clearly before you make any commitment.  If this is an area that you want to explore, then explore it with Property Rescue.  Valuations of your property are free and there is no obligation to proceed. 

Call for more details about how the scheme works.

The rate of inflation has risen to 4.7%; new unemployment figures released this week show 5.5% of the working population were without a job during the three months ending July 2008; those claiming Job Seekers’ Allowance have increased, the number of redundancies is on the rise, and the world financial markets continue to be jittery. 

As economic gloom deepens, it feels as if we are all at the mercy of the government, world monetary forces and powers far beyond our control.  There is little we can do to control inflation it’s true, but there are a few simple measures that can help stretch the household budget, especially as summer turns to autumn and we switch on the heating:

• The government has announced help – via the energy companies – for  homeowners to insulate their homes.  Your energy supplier will know more  and should be contacting you with details of how you might benefit.
• If you haven’t already shopped around for gas and electricity, now’s the time  to do so.  A surprisingly large amount of money can be saved by switching  provider.  Cost comparison sites are available, such as uSwitch.com. 
• Think about where you shop and what you buy, but remember to take  account of all the factors involved.  If you buy mainly in a cheap supermarket,  but ‘top up’ with luxuries from two others, you’re likely to spend more in petrol  than you save at the till. Use the facilities you already have – like your freezer  – and plan ahead when you’re grocery shopping so that the number of trips  you make is reduced.  Planning and making a list will help you buy only what  you need and avoid throwing out food past its sell by date.
• Don’t dismiss second hand stuff!  If you have growing kids or are expecting a  baby, look out for second hand shops, charity shops and car boot sales,  where new or nearly new clothes and toys can be picked up for just a few  pounds.
• Watch the interest on your credit cards.  If you have a big credit card bill, look  at transferring the balance to a company who offers a balance transfer  deal.  A little surfing on the net could save you a lot of money!
• Use comparison sites to check that you’re getting best possible deals on  insurance for your car, home and contents.  It’s tempting to ignore home  contents insurance when you’re strapped for cash, but if you change your  existing arrangements, you could save a significant sum without having to  relinquish it.

At Property Rescue we hope these tips come in handy.  They’re all simple things that are easy to do but very worthwhile.  Remember, if budgeting becomes impossible and you can no longer afford your mortgage repayments, always talk to your lender.  They will be keen to help you if at all possible.  If you need to sell to avoid repossession or simply to cancel out debt, then contact Property Rescue.  Even in such a dire housing market, they still guarantee to make an offer for your home.

This week the government has announced a £1bn package of measures designed to help homeowners through the current financial crisis.  Whilst everyone must surely welcome this news, the question as to whether it will go any way towards resolving the stagnant housing market remains unanswered.

In brief, the measures include:

• raising the threshold at which stamp duty becomes payable on property     purchase from £125,000 to £175,000 – effective immediately
• more government help with mortgage interest payments for those on income support or claiming job seekers allowance, plus a reduction in the length of time such people have to wait before they’re entitled to this help (a reduction from 39 weeks to 13 weeks)
• raising the threshold of the loan value on which people on income support and job seekers allowance can get help with interest payments – up by £75,000 to £175,000
• £200m into a scheme whereby ‘social landlords’, such as councils and housing associations, will help homeowners who get into difficulties – perhaps through part ownership or additional lending

Some first time buyers who have been putting off the purchase of their first home may be persuaded that this is now a good time to enter the market.  If this happens it could provide a kick start to the bottom property tier and help those in existing chains to complete.  However, there is scepticism over the effectiveness of these measures because none of them address the issue of money supply, which has been at the heart of the credit crunch  The number of mortgages being approved has fallen by more than 70% over the past year – a trend that is expected to continue.  Without funds available for first time buyers and others, the housing market seems doomed to remain in its current state of malaise.

Interest rates were held at 5% by the Bank of England at its meeting on 4 September – the fifth month in a row that rates have remained static as the Bank struggle to contain rising inflation.  The threat of a recession could, however, mean that the Monetary Policy Committee elect to reduce interest rates very soon in an attempt to buoy up a flagging economy.

Homeowners in debt should study these new measures carefully.  Some could find that the help on offer from the government is enough to see them through current difficulties, but inevitably there will be those for whom the situation is too dire or the financial problems too deep.  If you are facing the possibility of losing your home, talk to Property Rescue about their guarantee to buy your property.  Their service could allow you to stay in your home, rescue your credit rating and get through the hard times ahead.  Contact them for an informal chat without any obligation.

Homeowners struggling to pay their mortgages should be able to sell part of the equity in their homes to avoid repossession, the Liberal Democrats have said.

James Kirkup, Political Correspondent, The Guardian

The equity sale scheme is part of a package of measures drawn up by Vince Cable, the party's Treasury spokesman, to meet what he says is the urgent need to avoid thousands of families losing their homes.

A slowing economy and rising mortgage costs are putting growing pressure on millions of homeowners.

Figures earlier this month showed that the number of repossession orders made by courts in the second quarter of 2008 jumped by 24 per cent. A total of 28,658 orders were made in England and Wales between April and June.

Mortgage-holders struggling with their repayments should be able to sell all or part of the equity in their house and rent it back from housing associations or even private companies, Dr Cable has proposed.

The Liberal Democrats also say that courts should be given new guidance to ensure that they only order homes to be repossessed "in extreme circumstances".

Councils and housing associations should also be allowed to borrow money from commercial lenders and use it to buy land and empty homes for use as social housing.

Dr Cable outlined his plans as ministers complete their own economic assistance package, expected to be published as early as next week.

The Treasury is known to be considering a stamp duty "holiday" in the hope of stimulating the housing market.

Dr Cable said that showed ministers are missing the point.

He said: "The Government seems obsessed with fighting a losing battle to artificially prop up the housing market, rather than finding ways to deal with its worst effects.

"Ministers must act to help the thousands of families struggling to keep a roof over their heads.

Source of Article: http://www.telegraph.co.uk/news/newstopics/politics/liberaldemocrats/2632080/Struggling-home-owners-should-sell-equity-to-avoid-repossession-say-Lib-Dems.html