Beware of sale-and-rent back companies

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by Gill Montia

An increasing number of sale-and-rent back firms are targeting homeowners who are struggling to meet the cost of living in their homes. These companies offer to buy homes at below the market value and rent them back to the former owners.

However, the bulk of these companies offer no residence guarantee beyond 6 or 12-tenancies, leaving former homeowners in danger of eviction.

The elderly have been warned to look out for unregulated sale-and-rent back firms, offering an alternative to equity release, or find themselves homeless when leases expire.

According to the Financial Services Authority, the most reputable equity release firms will be part of the Safe Home Income Plans (Ship), the industry’s governing body.

A spokesperson for Home & Capital, the equity release specialist, commented that many sale-and-rent companies were run by buy-to-let landlords, often on the look out for bargain buys that could be sold on to make a return. The spokesperson added that people should be aware they are in danger of losing their homes if they sign up to a sale-and-rent scheme.