thePFDblog - Property, Finances & Debt

Sell and Rent Back - The Pitfalls - Beware

Finally the media is waking up to the fact that here are many amateur companies offering a sell and rent back service. This is where a company offers to buy your property and rent it back to you. My company offers this service and has done for many years. Unfortunately there has been a significant rise in new entrants and some are less than honest.

If you are thinking of selling your home and renting it back as a means to release cash from your property and/or clear debts and/or avoid repossession then beware of companies that fail to offer any guarantees of you being able to stay there long term.

A common practice is for them to offer a tenancy agreement for 6 or 12 months and then take possession ofthe property back once the fixed term has expired. Another common practice is raising the rents after just a few months, making the whole transaction far less attractive.

Other problems are that people are being forced to sign documents when they are visited - so called "lock out" or "lock in" agreemnts preventing you fromlooking at other options. Don't be pressured into selling to someone who does this. Ideally they should cover all the options open to you (e.g. selling through an estate agent, refinancing, cutting expenses, negotiating with lenders, debt managment plans through independent free and recognised organisations - like the CCCS and Citizens Advice) and give you time to make up your own mind - and even give you time to take advice from a financial advisor if necessary. Then if after assessing all your options you feel sell and rent back provides the best solution then check the company out and get some alternative quotes before proceeding.

It's also worth noting that some companies offer a far better price than others - beware as this may mean that they aim to get you out of the propoerty after a few months rather than rent to you longer term.

This business is unregulated, and despite my calls and those of other more reputatble operators in this industry for this service to be regulated, there doesn't seem to be any immediate plans for regulation to be put in place.

I offer personal guarantees regarding term of tenancy and level of rent rises and also encourage all prospective new clients to speak to previous clients of mine so they get some peace of mind. Any company that is reluctant to let you speak to any of their sell and rent back clients is probably hiding something - more than likely the fact they are only just starting out, or that they have evicted the tenants or forced them out by raising rents.

The Tonight programme presented by Trevor McDonald highlighted this problem last week. Finally the media is taking note of this problem. It could be the next mis-selling scandal, so please beware of who you are dealing with.

Interest Rates Rise Again

It was a widely expected interest rate increase, but that doesn't make it any easier on the monthly finances for the millions of homeowners with mortgages. A 0.25% rise doesn't sound much, but when taken in the context of other recent rate rises, it all adds up to a fair amount out of the monthly budget - and many homeowners are set to feel the pinch.

This is the highest interests rates have been since 2001 - unchartered territory for homeowners who've purchased their first home in the last 6 years or so. With rising utility costs, council tax bills and insurance - being a homeowner is becoming an expensive business.

Keeping a roof over your head is seen by many as the number 1 priority - and this has always meant paying the mortgage in full on time every month. Now however, people are being caught in a trap where they are having to pick which bills to pay and juggle the finances to keep their heads above water.

No doubt lenders will be rubbing their hands at the prospect of repossessing properties and charging lots of interest and fees in late payment penalties (though they won't admit to it of course).

Sell and Rent Back - The New Way To Escape Trouble?

Sell and Rent Back is becoming a more and more common way for people to get access to the equity built up in their property, or as a way for them to clear debts through releasing cash on sale but with the added benefit of not having to move home.

It seems a strange concept at first, but for some people it can really work out. They get to clear their debts, stay in their home and reduce their monthly outgoings. Some even end up with a decent amount of cash back too.

Take the example of a transaction we did with Ms C of Basildon. She was paying £850 on her £80,000 mortgage and was under pressure from her lenders for some payments she had missed. She also owed £10,000 in unsecured loans. On selling her property for £110,000, she rents the property back for £725 per month, saving £125 per month. She has paid off her mortgage and loans, and has £20,000 cash in the bank. Of course, and most importantly for her, she gets to stay in the home she loves for as long as she likes. All this in exchange for the loss of £20,000 equity in a home (it was worth £130,000) that she was unlikely to ever own.

Sell and rent back also works well for those wanting to release equity where traditional equity release schemes prove too costly (because of the low values offered and high fees charged) or too restrictive (most require people to be over 65 and attach many conditions).

For further details about sell and rent back and what it can do for you get in touch or visit www.fasterpropertysale.com.

Are you in the Debt Club?

DEBT is a common problem in today's society. An innocent loan here and there can turn into a nightmare when money gets tight and repayments are missed.

The best solution is to work things through in a discplined and logical fashion to get yourself out of trouble. But you have to want to get out of debt and be srious and focussed to ensure you get free from your debts.

Making a plan about how to get out of debt is critical. If you have no plan and no goals you'll never get there. You have to have a target, make a plan to achieve and follow it through - no matter what.

If you borrow more and more, teh debt problem will get worse and worse. You first of all need to stop relying on credit cards and loans to fund your current expenses. Stop teh borrowing habit and you'll be well on your way to freedom from debt.

To get started, you need tow ork through all your income and expenses. Make teh time to work through what's coming in and what's going out every month. Organisations such as teh consumer credit counselling service can help you if you are struggling. One easy nd effective way is to go through all your statements and receipts for a month, or keep a diary of all income and expenses for a month. At teh end of te month, you'll have a good idea of what's coming in and going out - but don't forget any expenses that are incurred quarterly or annually - you'll need to include these too.

Repossession Help - Don't Fear The Courts!

The threat of repossession is enough to scare anyone into submission. However, knowing about the process, your rights and what you can do about it gives you a significant advantage over most people who all too quickly give up, give in and lose their home.

There's a comprehensive guide to repossession which covers the process, your options, what action you can take and provides lots of other useful links. It's available from www.repohelp.info - or you can e-mail me for a copy. The process is actually fairly straight forward. As soon as you've missed a payment the lender will write to you. Miss two payments and they more than likely will get their solicitor involved.

The most important thing you can do in this situation is to take action. Contact the lender and explain your situation and aim to negotiate a new payment plan. Make sure you to make notes of conversations, get their responses in writing and aim to follow up your calls with a letter and keep a copy. That way, if you go to court for a hearing you'll be much better prepared.

If you can afford to meet a full monthly payment and contribute a small amount towards catching up with arrears then normally the lender will accept, but it all depends on the lender. Some are far more helpful and understanding than others.

If you can't reach agreement with your lender the next stage will be a court hearing - this is a possession order - a claim to the curt by your lender to regain possession of the property on the grounds of breach of contract (missed payments). Here you can present your case to the judge, who in my experience are normally very helpful, friendly and sympathetic.

The Season Of Goodwill - Unless You Are A Lender!

Well how to you like that! Mr Turner has 3 young kids, it's 3 weeks until Christmas and his lender decides to resort to bullying tactics to get him out of his property - that's right, REPOSSESSION ! There is no season of goodwill with lenders like this!

Mr Turner had a heart attack 18 months ago. He didn't have any form of accident & sickness insurance (and given the recent press and TV coverage there's no guarantee they would have paid out even if he did have some). Around the same time Mrs Turner gave birth to their daughter, also a cut in income as she was now on basic statutory maternity pay.

In their desperation for meeting bills and catching up with mortgage payments they turned to some financial institutions for help, where they found many willing lenders only too happy to provide them with a secured loan at a staggering 8% interest rate and various conditions, fees, charges and penalties attached.

Help Is At Hand - So Use It!

I had several calls this week from people calling my business Faster Property Sale. It amazes me the level of debt organisations allow people to get into. Mr Reynolds called to ask if I could buy his property and rent it back. On further investigation of the loans secured against his property we found he had £20,000 more secured against his property than it was worth on a full open market valuation. He was shocked to learn that some of the unsecured loans were now secured against his property.

The sad thing is if Mr Reynolds had contacted organisations such as the citizens advice bureau, or the consumer credit counselling service first, I suspect his unsecured loans would be much more managable with frozen interest and reduced monthly payments negotiated by them on his behalf. As it is now, the lenders are pushing for an eviction and Mr Reynolds is likely to lose his home.

I am working with the CAB to negotiate the lenders down to a lower settlement figure so that I can buy his property and help him back on his feet. It still annoys me that his lenders didn't help him earlier when he explained the difficulties he was having.

Surveyors Have The Last Word - Don't They?

Right that's it. Surveyors are quickly scaling the ranks of my most irritating and unfriendly people list. A sweeping generalisation - yes. However, all the ones I have met haven't done anything to  disprove this!

My own house was valued last year by a surveyor at £20,000 less than comparable properties, that were smaller and didn't have a conservatory. When I showed them comparables, SOLD PRICES, and lots of estate agent valuations they said mmm, perhaps we didn't do our research thoroughly. Sorry.

This morning I had the the displeasure of seeing another one for a property I am purchasing. There was no conversation, and he didn't have a clue about the area or going prices.

Debt Deceivers

Welcome to my blog! The old one RIP. Now we're going for a new style in line with our new website.

The Trevor McDonald Tonight programme this week was about debt deceivers - people who rack up huge debts without their partners knowledge. Unfortunately, for me, this wasn't really anything new. You see, through my property business, FasterPropertySale, I am often called by people who've got themselves into debt - and their way out is to sell their house to release the equity and pay the debts off - often renting their home back at a (more) affordable monthly payment.

Sometimes people can manage themselves out of their situation and keep thier home. Whilst I am in ultimately business to build a property portfolio and make some profit, I always see buying the property as a last resort when people are in this kind of situation. Indeed, having worked for a bank in my previous life, I like to help people who feel a financial institution has let them down - and use my experience to hit back at the lenders, especially for those under the threat of repossession.