FSA Shuts Down Sale And Rent Back Schemes

You may have seen the ads a while back, we will buy your house and you can stay in it.

Sell us your house today!  

Cash paid for your property and you still keep it!

Basically what these programmes were is where you, or someone, sells their property to someone or an investment group, for a price that is usually below what the property may be worth, and then the seller, rents the property back from the new buyer; thus the person selling their home doesn’t have to move.  Just pay rent to the new buyer/landlord.

In theory this sounds, as many things do, like a win-win situation; but things are not always  what they seem.

In many instances the person selling their home is experiencing financial issues and could be struggling to keep up their mortgage payments, or be in arrears with the mortgage.

The ‘buyer’ offers quick cash which is a solution for the person in trouble, but the offer for the property is low, much less then if the seller waited and had the time to sell the property properly.

The FSA has found that the majority of these transactions were either unaffordable or unsuitable and never should have been sold.  Basically poor practices and dodgy dealings is what they found.

The FSA said many of the sales breached FSA rules, and training and compliance monitoring and record keeping were all inadequate.

So this ‘market’ has been suspended by the FSA.

I believe, obviously from what was found, that it needed to be closed down.

I also believe there is a need for this type of market, and if set-up and run properly, could be a benefit to many property owners in trouble.

Look at the reverse mortgages started years and years ago.  If you had substantial equity in your property and were an OAP or of a certain age, you could have the equity in the property paid to you on a monthly basis to live off of.  Then once you passed on, the property would then go back to that lender, a reverse mortgage.

Of course some people would rather just sell their home, take all the money and move on.  But many preferred to stay in the house, even if they didn’t own it any longer, just the same as someone selling their property and then renting it back.