The Top Ten Things To Consider Before Selling And Rent Back
1) Sell and rent back companies all offer different amounts with the average being 85%. However offers can be from as low as 70% to as high as 100%. Companies which offer 100% usually give you 70% upon completion of the sale and 30% at the end of the tenancy.
2) Selling your house can often be far from a relaxing process. To make it as peaceful as possible it’s important know who the sell and rent back company you are dealing with. Are they reputable? Ethical? In good financial standing and will still be around at the end of your tenancy period? All these questions are very important and make sure you do plenty of research on a sell and rent back company before you enter into any agreement with them. If you can get an independent personal recommendation from someone who has gone through process, but as sell and rent back is still an emerging sector of the property this may be tricky. Searching internet forums and message boards may also reveal some more information on the range of companies entering the sector.
3) Are you guaranteed long-term rental? What happens when you become a tenant? Look for companies which offer a long-term contract, this will give you peace of mind that you cannot be evicted after a short period. When you become a tenant you will generally have to pay for council tax and the normal gas, electric bills as any tenant would.
4) Who will pay the valuation costs and legal fees? Usually the company you sign with will pay the valuation costs and legal fees for you. Most will do this to make the offer seem more attractive but only buy the property for a lower percentage. Although there are exceptions as some companies will pay for the costs and fees whilst offering a high or full percentage. Aim for these!
5) What about privacy? Will my details be kept private/confidential? Each of the sell and rent back companies should keep your details private and confidential to comply with the data protection act, although ensuring the company is reputable beforehand should eliminate any risk of breach of confidentiality. Unless expressed otherwise, the only people who will know about what happened will be you, the company you dealt with and the solicitor handling the case, and a “sold” sign will not be put up outside your house.
6) Will the rent I pay stay at pre-agreed levels? Some sell and rent back companies will offer a fixed rate for the first few years, after then the monthly rental payments may increase. Others will not guarantee a fixed rate and leave you open to increased payments later on in your tenancy try to avoid these. Often the best deal will be the sell and rent back firm who will offer you 10 years (or whatever the length of tenancy agreed) at a single fixed rate which is signed into the contract.
7) Will the valuation be independently calculated? When chooseing a sell and rent back company it is always advisable to go with one that offers an independent valuation, especially by a member of the Royal Institute of Chartered Surveyors (RICS).
How long is the process likely to take? How quickly could you receive your money? Companies can complete the entire deal in 24 hours if that is what’s required and as long as the legal paperwork goes through ok, but most will take 3-4 week to get everything sorted. Your money is usually released after the transaction has been completed.
9) Who will own and maintain the property? After the transaction has taken place, your landlord will generally be the company who bought the property from you and they will be responsible for taking care of any maintenance or emergency callouts that occur. That is why it is essential to ensure the landlord is reputable or is using an experienced and reliable property management company to quickly address any issues you may have. As for the contents, the “moveable furniture” is typically still owned by you, unless you negotiate a deal with the company to sell them the furniture as well.
10) Buying Back? Some companies will offer a deal where you can choose to buy your house back off them at the end of the rent period. This is very useful for those who are having a difficult time financially but expect things to improve in two years or more when they can afford mortgage payments again.
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