Sale and rent back schemes
Sale and rent back schemes allow you to continue living in your home, if you are unable to meet the full payments for your mortgage.
What are sale and rent back schemes?
Sale and rent back schemes are operated by private, profit making companies. The companies buy your home, usually at a reduced price, then rent it back to you. However, the tenancies offered won't provide long-term security and you can easily be evicted.
Regulation of sale and rent back schemes
Any company that wishes to run a private sale and rent back scheme has to be registered with the Financial Conduct Authority. Regulation means that companies have to adhere to certain rules and practices. To find out if a company is registered you should look at the Financial Conduct Authority register.
What are the benefits?
The benefits may include:
- struggling home owners get to stay in their homes, avoiding the trauma of repossession
- any equity you have can be released to pay off debts (although mortgage debts should always be your top priority)
- both you and your lender would avoid the costs of going to court and having your home repossessed.
What should I do before I contact a scheme?
To avoid losing out financially, you should:
- Continue to pay as much as you can, to avoid the build up of further arrears.
- Get debt advice from an independent agency (see 'where can I get help and advice' below). Most private debt companies that advertise for customers should be avoided. Specialist debt advisers can make a full financial assessment and help you work out a plan for clearing your debts, and covering your living expenses.
- Consider negotiating with your lender first - most lenders consider repossession to be a last resort and are willing to discuss other ways to make your mortgage more affordable.
If, after getting advice, you do decide to join a scheme, be sure to ask the following:
- Can you maintain ownership of part of the property?
- What type of tenancy would you have?
- What protection from eviction would this give you?
- What would the rent and other payments be?
- Will you have to pay for all the legal and financial costs associated with selling your home to the scheme?
Will I be able to claim housing benefit?
If you sell your home but continue to live there and pay rent, you should be able to claim housing benefit, or local housing allowance if you use a private or profit making firm, provided you can show that you would not have been able to carry on living in your home if you hadn't sold it. If you need help claiming benefit, talk to an adviser at a housing aid centre, Citizens Advice Bureau or welfare rights agency - use the Advice Services Directory to find an agency near you.
Where can I get help and advice?
Always get independent advice before signing up for any scheme. You can get advice from: