Rent Back Scheme Gets You Cash, Without Snatching Your House
Published on www.wordpress.com. November 5th 2008
Financial crunch is a bane in life. It can eat away your peace of mind. It is not easy with lenders knocking at your door. Increasing debts can be stressful. Quick sale of your house is one solution to get out of the hard situation. But this again is not all that easy, when one follows the usual methods. Selling your house involves a chain process where you may have a hired real estate agent negotiating for you the right deal with the potential buyers. The entire process is time-consuming as well as full of hassles.
You may also have to put up with a 'For Sale' signboard in front of your house, so that even your neighbours get a sniff of your financial situation. Not a very savvy situation. With a
Sell and rent back scheme, you have the option to sell your property quickly and rent it back at the going market rate or less. This is a great financial product to consider if you have run into financial difficulties. In any case when you are in urgent need of cash and want to avoid the burden of shifting after a quick house sale, you can rent it back for as long as you like. This way you get the instant cash that can save your day and also not remove your very own house-roof from over your head.
If your financial prospects are as grim as a house repossession, you can avail to the rent back scheme as a good fall-back option. It will help you to pay off your mortgage and what better, you would still be residing in the house. Selling your house and renting it back is great way to release the equity tied up in your property. You can do the same when you have to relocate or migrate. You can sell off your present property, to get the cash you need desperately and then rent back this house so that that you stay in the house until you are ready to move out.....
WHY A QUICK SALE OR TAKING A SELL AND RENT BACK DEAL COULD BE USEFUL
Published on www.smileenter.com. By Oliver Wingrove. November 2nd 2008
If you have a mortgage and are facing arrears give some thought to taking a sell and rent back option. You may be just starting to have trouble paying your mortgage and are stressed trying to come up with the money each month. Selling with a rent back option might be a viable solution to your problems. The best thing with this option is that you could sell your house and still live in it, and have the cash as well to pay off the mortgage lender.
With interest rates rising all the time, more homeowners are getting into arrears with the mortgage meaning repossession could be imminent. If you decide to take this option, it would stop repossession or even eviction straight away. You would then be able to pay off your mortgage and pay monthly rent which is more affordable than the mortgage.
If you need a large cash amount and want to use the equity in your home then you could take a quick sale. This is an ideal solution for you to still have your home and spending money in the shortest time possible. Knowing that you have sold your house to reputable company means you still have somewhere to live, and would give you peace of mind along with a solution to your cash problem. You just pay rent each month and do what you like with the money, knowing that in the future you can buy back your home.
If you are getting divorced it can be very stressful and a quick sale could help greatly. Having the problem of selling your house, uprooting the kids to a new school and starting family life all over again somewhere else can add to the stress. If you take a rent back solution you could still stay in the house after the divorce by choosing to pay rent each month.
If you are emigrating then a quick sale would be useful. This can be a huge bonus if you have to leave at very short notice and you want to leave with no loose ends. You could sell your house and stay in the property until it is time to leave and have the peace of mind of a sale if you take the rent back option. You would have the cash in your hand and then be able to leave at any time. There are a variety of reasons why a sell and rent back option is useful.
These are just some of the many options where a quick sale and a rent back company may be able to help you. Of course there could be others, in fact any situation where you are struggling financially you could look into what a rent back solution could offer. A good company would be able to give you a rough idea of how much your home is worth in just 24 hours and the whole process of selling with them could be over in just a couple of weeks or less.
Situations Where You Might Benefit From a Quick Sale Or Rent Back Deal
Published on www.bharatbhasha.com. By Oliver Wingrove. November 1st 2008
If the time arises in your life when you are getting divorced, it can be a very stressful time. You would have to sell your home to split the proceeds and begin again. Selling your home could take some time and if you want to move on with your life this can add to the stress. A better solution could be to make a quick sale then split the proceeds of the sale down the middle and move on. A company offering a sell and rent back will also offer a quick sale and this should be looked into. It can work out great if one partner wants to remain in the home. Sell the home quick, split the proceeds and then rent it back with a view to buying back in the future.
You may be emigrating or relocating due to work and this means you could sell your house quickly and you would also have cash in your hand. Along with this you would have peace of mind that you sold your home well before you leave. If want to take this option and your departure date is not due then you can still sell quick and remain until it is time to leave.
If you know that you can not pay your mortgage and might have to leave the home you love if the lender repossesses a rent back option may be the answer. If you choose a rent back option, this means that you will have a lump sum in cash to payoff the mortgage and still be able to remain in the home as tenant by just paying rent to the company who bought your home. You would also have the option of being able to buy back the property in the future for a fixed price if and when your finances became stable again.
A quick sale could also be taken with a rent back option if you want to release the equity in the home. You might need cash fast and rather than take on a loan make good use of the equity that has been built up in the home. If this is the case then a quick sale is needed and companies offering buy to rent and quick sales can give it to you. The beauty of taking this option is that you will be able to buy back the property for the sum that was agreed upon at the time of selling....
'Days of inflated house prices are over'
Published in Western Mail. By Abby Alford. October 27th 2008
The credit crunch will prompt a return to old-fashioned values, producing a more sensible and sustainable housing market, according to the head of an organisation representing thousands of Welsh property professionals.
Cathy McLean, director of the Royal Institution of Chartered Surveyors Wales, said the "madness" of the days of inflated house prices and five-times salary mortgages will never return.
She said while the housing market slump would leave many casualties in its wake - repossessions are rocketing and many home- owners face negative equity - it would correct a market that had run out of control.
"It was never sustainable," she said. "Borrowing a ton more money than you needed was just madness. There was a lack of due diligence and management by the banks."
"It was madness that people thought prices were always going to go up."
"Everybody wanted everything today, rather than saving for it. People were just rushing into the property market thinking there was never ever going to be a problem."
"You do get fantastic stories of people who have made a killing, but these people are few and far between."
She attacked TV property shows for fuelling greed and an obsession with house prices, leading many people to see property as a short-term rather than a long-term investment.
"Prior to 10 years ago we lived in our house because we liked the area it was in and we liked the school around the corner, but now it's about whether it's lost or gained one or 2% in value since the last time we looked, which was probably last month."
"People are truly obsessed with the value of their house. It's only, I think, because of TV and the media bombarding us every day with news about property prices and shows like Property Ladder showing people how they can supposedly make a fortune by doing a bit of work to a run-down house."
"People have been relying on someone on a TV programme to tell them if something is a good idea. What qualifications have these people got?"
She added: "In the future, people will think more about the quality of their housing and where they want to live, where they want their kids to go to school, how handy is it for work, what the social atmosphere is like."
"Nobody should be buying a house just to make a quick profit because property isn't like that. But it's still a good investment if you look over the long term."
Her comments come as the number of homes changing hands increased for the first time in five months during October, but prices continued to slide.
The average property in England and Wales lost a further 1.3% of its value during the month, according to property information group Hometrack.
The latest fall left homes costing around £163,200, 7.3% less than a year ago and at a level last seen in March 2006. But the number of properties sold rose by 5.4% during the month, the first increase in transactions since April.
The group said the jump could be early evidence that vendors were finally starting to accept lower offers on their homes after a long stand-off, and this could help to free up the current logjam in transactions....
Scottish house prices 'set to plunge by 12%'
Published By David Leask. October 26th 2008.
SCOTTISH house prices will fall even harder and faster than predicted, leading forecasters warned last night.
Capital Economics said it now expected properties north of the border to lose 12% of their value this year and another 15% next.
The research giant, one of the most respected firms of market analysts in the UK, had previously predicted a more modest decline of 10% in 2008 and again in 2009.
The new, revised forecast would see Scotland's average house price tumble from an official £158,360 in 2007 to just £121,145 in 2009.
Seema Shah, one of the firm's analysts, said house prices had been over-valued by massive increases seen during the past decade. Therefore, large drops would be an obvious consequence.
She said: "Just to bring prices down to the kind of level we would regard as value for money would take that kind of magnitude of fall."
The decline, however, will still be far less steep than in England, Wales and Northern Ireland, with Capital Economics predicting UK house prices to plunge 35% over this year and next.
One of Scotland's leading analysts yesterday also came up with new and gloomier forecasts for Scottish house prices. John Boyle, of Edinburgh-based DTZ, had expected properties to lose 5% of their value between the summer of this year and the summer of next. Now he believes the figure will be between 5% and 10%.
Boyle, who has traditionally been more optimistic than Capital Economics, changed his mind after weeks of chaotic crashes on international financial markets and an increasingly bleak picture emerging of economic fundamentals.
He said: "My prognosis must become much gloomier because unemployment has gone up quite suddenly. It's still lower in Scotland than in England, but that will affect of the overall affordability of homes."
"The big caveat, however, is that there is a huge variety of patterns in house prices across the country. House price forecasting can be a pretty tricky proposition."
Scotland's official Government house price figures are traditionally published months in arrears and have still to catch up with the some of market misery that saw the volume of sales halve from the same period of 2007.
Nationwide, one of the country's biggest building societies, this month said an average of £8,000 had dropped off the price of Scottish homes over July, August and September. That was the steepest decline on record. Average Nationwide house prices in September 2008 were 7% lower than a year before, just before the credit crunch that has sparked the current economic turmoil.
Scotland's two biggest groups of house sellers reported similar figures for the third quarter. Glasgow Solicitors' Property Centre (GSPC) said average prices in the country's biggest city were down 8% at £142,500. Its Edinburgh counterpart, ESPC, said its average was down 7%.
Headline figures, however, continue to mask huge variations, even within a single city, market watchers warned.
House sales fall 50% in Merseyside in just one year
Published on www.liverpooldailypost.co.uk. By David Bartlett. October 6th 2008.
HOUSE sales in Merseyside and Cheshire have fallen by almost half during the past year, new figures compiled by the Daily Post show.
The figures are revealed in our most in-depth examination of the region's property market to date including the average price of a detached, semi-detached, terraced, or apartment of most postcodes in the area.
Compiled using data from the Land Registry, sales were down 39% in the L postcode areas which includes Liverpool, Knowsley, West Lancashire and most of Sefton for the year to June the period for which the latest figures are available.
The number of sales in the CH area, which includes Wirral, Chester, Ellesmere Port, and Neston was down 45%. Last night, estate agents warned that, until the world's financial markets stabilised, it was difficult to say exactly when sales would pick up.
It follows the revelation last week that Liverpool's housing market had undergone one of the five steepest declines in the country, suffering a 13% fall in values in the year to September.
Paul Lea, of Bradshaw, Farnham, and Lea, said: "It's a tough old business at the moment. People were starting to come back, but then all of a sudden it's dead again."
LDP investgiation reveals worrying falls in our most extensive examination of the region's property market, we have broken down the average price of homes, by category and by postcode.
According to data from the Land Registry sales were down 39% in the L postcode area which includes Liverpool, Knowsley, West Lancashire and most of Sefton for the year to June the period for which the latest figures are available.
The number of sales in the CH area, which includes Wirral, Chest- er, Ellesmere Port, and Neston was down 45%.
CH43 Bidston, Oxton, Prenton, and L25 Gateacre, Hunts Cross, and Woolton were the most popular postcodes by volume of sales, with 130 properties changing hands in each between April and June.
In L18, which covers Allerton and Mossley Hill, there were 47 sales, but the average price was down 11.4% compared to the same period last year.
In Speke, the Land Registry's figures show only 11 sales, none of which were semi-detached.
However, CH60 which includes Gayton and Heswall on the Wirral, recorded the lowest number of sales with just nine. But in some areas, sales of particular types of homes have slowed to almost nothing. The Land Registry does not provide data where fewer than three sales have been recorded, in a postcode sector.
The data shows there were no sales of flats in Waterloo or Aintree.
While in L17, which covers Aigburth and Sefton Park, only three detached homes were sold, the same applies to Childwall and Wavertree, in L16 and L15 respectively.
Last week, the Nationwide said Liverpool's housing market had seen one of the five steepest declines in the UK with a 13% fall in prices in the year to September.
Homes in the North West were worth around 9% less, and nationally prices fell by around 12%.
Squeeze on loan supply will push house prices lower
Published on www.ft.com. By Ellen Kelleher. October 4th 2008.
The scarcity of low-priced mortgage deals is hitting home sales across the UK - as the value of the average property has fallen by 12.4 per cent in the last 12 months due to shrinking demand, according to Nationwide.
On average, a home in the UK now costs L161,797, according to the monthly house price index, released this week by the building society. And the market is not likely to improve in the short-term as economists predict further falls. "The latest fall-out in the property market is not altogether surprising given the turmoil in financial markets over the past month," says Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. "The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggest that further price falls are likely."
Sales of more expensive homes in London areas such as Knightsbridge and South Kensington have held up a bit better as foreign investors look to benefit from the weaker pound by purchasing high-end properties. But generally the value of properties worth more than L1m has still fallen 10 per cent in the last 12 months in the UK, as the slowdown in the City has damped demand.
Across the country, falls in prices were sharper in the south of England than in the north.
The slowdown in the mortgage market is hitting first-time buyers in particular as they are now required to put down larger deposits. Fewer than 20 per cent of them are now taking out mortgages with loan-to-value ratios of 90 per cent or higher.
Nationwide's survey follows stark figures for mortgage lending in August from the Bank of England, which found that the amount of money borrowed had collapsed by 95 per cent in a month. The lending figure was also 97 per cent down on August 2007, when the credit crunch began.
While the mortgage drought is hampering house sales, the rental sector is seeing increased demand, apart from in prime London markets where City job losses are prompting landlords to cut rents.
As for how far prices have yet to fall, Lucien Cook, director of residential research at Savills, the estate agent, says: "We expect prices to fall by 25 per cent over 2008 and 2009, stabilise in 2010 and return to growth in 2011".
Why even mortgage brokers are struggling to find mortgages for their clients...
Published on: www.fool.co.uk. 1st October 2008.
A massive two-thirds of brokers have been unable to source a mortgage for clients in the past two months, according to the Intermediary Mortgage Lenders Association. This surprising statistic highlights just how difficult it is to secure mortgage finance for many borrowers, with even the experts struggling to find us a deal.
The main reasons brokers quoted for the inability to find their clients mortgages are the tightening of lending criteria and the increase in deposits required, as loan-to-values (LTVs) have been cut - a problem mentioned by 51% of respondents. After that, 23% of intermediaries cited the withdrawal of products as the biggest impediment.
And this survey was released last week, before B&B crisis and before hundreds more products were pulled from the market on Monday, wiping out 11% of available mortgages according to some estimates.
So the situation has just got a whole lot worse!
Problem areas
Brokers said that they are having problems finding deals across all product types with remortgages mentioned by 72% of respondents. Over half claimed they had been unable to source a loan for a first-time buyer and 50% couldn't help a sub-prime borrower to find a deal.
Perhaps most worrying is that over a quarter (26%) of intermediaries had struggled to find deals for standard status borrowers - the average Joes who are perceived to be least affected by the credit crunch.
How can you avoid this?
Is there anything you can do to prevent yourself being one of the borrowers that brokers, or indeed lenders, cannot help to find a decently priced mortgage?
Well, it's easier said than done. There are ways you can ensure you can have access to the best deals, but they may not be easy to achieve. Here are three key considerations:
1. Borrow less.
We would all like to have a whopping 40% deposit but it's not that easy, is it? However the best and most competitive mortgages are available to those who only need to borrow 60% of the property's value. However, there are plenty of extremely good deals for those who have 25% to put down. It gets tougher to find a deal the smaller your deposit so it really is essential that you try to save as much as possible. If you have a deposit of 5% for example you will have a pretty small selection of expensive mortgage to choose from. The good news is that with house prices falling, first-time buyers may be able to continue saving for longer, rather than feeling pressured to rush into the property market right now.
2. Clean up your credit record.
Lenders love whiter than white borrowers with no history of bad credit. This has always been the case and they have always charged 'sub-prime' borrowers more to offset the lending risk. Now they simply won't lend to people with anything other than the minimum of credit problems. If you do have outstanding late payments on any credit agreements, settle them before you even apply for a mortgage. Although remember that lenders can still see past payment discrepancies on your credit file.
3. Become Mr and Mrs Average.
Unusual requirements are not what lenders want at the moment. Although there are self-cert mortgages out there for those who can't prove their income, for example, they are expensive and the cheapest deals are available to those in full-time employment, on the electoral roll where they live, and preferably having lived in the same property for a while. Credit scoring often penalises those who move house, and jobs, frequently.
B&B fallout will hit mortgages and take prices down further in UK property market
Published on: Propertywire.com. 30th September 2008.
The fall out from the nationalisation of UK troubled bank Bradford & Bingley will further restrict the choice of lending in the property market, it is predicted.
The most competitive deals are being pulled and the cost of mortgages will be increased. Until now B&B was offering the best buy-to-let mortgage deals.
Analysts are warning that between 400,000 and 500,000 of the 1.2 million outstanding buy-to-let mortgages in the UK are likely to require refinancing in the next 12 months.
With the values of properties falling and the required rental cover needed to secure new borrowing rising, most borrowers will struggle to meet lending criteria, according to Ray Boulger, senior technical manager at mortgage broker John Charcol.
'Nobody is now offering 85% or above. If people can re-finance at 75% or less they will have a lot more choice, although valuations are a lot more conservative,' he said.
'With rental cover now expected to be between 110 to 120% of mortgage payments a lot of people are going to struggle to re-finance and will have to take their current lenders default rate,' he added.
Attention will now turn to the government and its strategy for dealing with the rising arrears level on the B&B loan book, facing a choice of protecting value and being seen to foreclose on vulnerable borrowers. B&B had seen a rise in the number of borrowers more than three months in arrears.
The fall out from the UK crisis combined with the turmoil in the US will have a further weakening effect on property prices. Howard Archer of economic analysts Global Insight predicts that banks will keep cutting back on lending.
'It seems odds-on that house prices will head downwards for some considerable time to come, particularly as lending conditions tighten further in the near term at least amid the current turmoil caused by the collapses in the US,' he said.
He warned that rising unemployment would speed the fall in house prices as people will be forced to sell homes at huge discounts.
Analysis firm Capital Economics also predicts further house price falls. 'Recent events in the financial markets and the likely fall-out on the wider economy, which is already tipping into recession, are set to weigh heavily on buyer confidence,' said Seema Shah, property economist.
U.K. House Prices Fall the Most Since at Least 2001
Published on: www.blooberg.com. By Brian Swint.
29th September 2008 .
U.K. house prices fell by the most in at least seven years in September as the global financial crisis choked off mortgage lending, Hometrack Ltd. said.
The average cost of a residential property in England and Wales slipped 6.2 percent from a year earlier to 165,300 pounds ($304,000), the London-based research company said today. That's the biggest annual drop since the index started in 2001. Prices fell 1 percent from August.
Credit markets have seized up after banks' concerns about losses led them to hoard cash, making it more expensive for potential homebuyers to find mortgages. That's pushed the U.K. into its worst property slump since the early 1990s and led the government today to seize Bradford & Bingley Plc, the country's biggest provider of home loans to landlords.
"Weak demand continues to put a downward pressure on house prices," said Richard Donnell, director of research at Hometrack, in a statement. "It is very hard to identify the mechanisms by which the current cycle of weak confidence, declining sales volumes and falling house prices can be reversed in the near future."
The number of homes changing hands may fall to the lowest level since the 1960s this year, Donnell said. In London, prices have dropped 7.1 percent in the past year, the report said. Rightmove Plc, the most-used property Web site in Britain, said last week the property market is "on its knees."
Mortgage Approvals
Buyers are now clinching an average discount of 9 percent from the asking price of a home, the Royal Institution of Chartered Surveyors said in a report today.
U.K. mortgage approvals dropped to 32,000 in August, the lowest level since comparable records began nine years ago, Bank of England data showed today. The value of loans fell to 143 million pounds, the lowest since April 1993.
Prospects for mortgage lending are deteriorating after the collapse of Lehman Brothers Holding Inc. derailed financial markets, sending lending rates higher. The cost of borrowing pounds for three months jumped to the highest since December on Sept. 25.
Bradford & Bingley was seized after the crisis shut off funding and competitors refused to buy mortgage loans that customers are struggling to repay. Banco Santander SA, Spain's biggest lender, will pay 612 million pounds ($1.1 billion) for the bank's 197 branches and 20 billion pounds of deposits.
Britain entered a recession in July, forecasts by the European Commission and the Confederation of British Industry, the country's biggest business lobby, show. Bank of England Governor Mervyn King said in August that economic output will be " broadly flat" for a few quarters.
Bradford & Bingley: your main questions answered
Published on: www.citywire.co.uk. By Deborah Hyde. 29th September 2008.
What does it mean for savers?
Nothing should change. As of this morning Bradford & Bingley accounts remain open and branches will trade as usual. Banco Santander has bought £20 billion in retail deposits. Bradford & Bingley's customers will continue to use their existing channels - branches, telephone and internet - for transactions, as usual, according to the statement from Abbey. As a result of the involvement of the Financial Services Compensation Scheme - and the extra money the government has lent it - all the deposits of B&B's 2.5 million savers are protected.
What does it mean for B&B mortgage holders?
The situation is more uncertain for the bank's 1 million mortgage customers. Their mortgages have been nationalised and are now the responsibility of the government. As Bradford & Bingley mortgages come up for renewal, it is likely borrowers will be encouraged to go elsewhere and will not be offered attractive remortgage deals. This could cause problems for buy-to-let investors and holders of self-certified mortgages.
With a rising number of the mortgages in arrears, industry watchers say there remain issues about whether the government-owned bank will make moves to actually repossess people's homes.
What does it mean for investors and shareholders?
The news is very bad for B&B's 950,000 private investors holding its ordinary shares as well as its permanent interest bearing shares (Pibs) as well as City institutions who own the bank's bonds and who gave the bank £400 million in a fund raising this summer. The Treasury's statement makes it clear that its move to take over B&B's assets and liabilities means they will receive nothing.
Many investors dumped their shares as the stock collapsed this year to close at 20p by last Friday. Those who did not get out, unfortunately, will get nothing.
What does it mean for taxpayers?
The government has been trying to reassure taxpayers that they will not have to carry the cost of nationalising the group. The government has lent money to the Financial Services Scheme to provide complete protection for B&B's savers. Interest on the loan will be paid for by the banking industry and it is hoped that the loan will be repaid in full without need to call on public funding in the long-term. However, the £50 billion of loans and mortgages will be added to the national debt and the government (and taxpayers) will ultimately be responsible.
What does it mean for the housing market?
This looks like very bad news for the housing market. With some industry analysts suggesting that as many 500,000 buy-to-let mortgage deals may be up for renewal next year, it is likely that many borrowers will not be able to arrange a new deal.
The credit crunch and problems at HBOS means that around two thirds of buy-to-let lending supply has been withdrawn. If buy-to-let investors struggle to find attractive remortgage deals and take fright at higher borrowing costs we could see a glut of houses being put up for sale which would further depress prices. Self employed borrowers with self certified mortgages may also find it difficult to remortgage.
Is this the same as what happened to Northern Rock?
No. The government nationalised all of Northern Rock. Today, it only part nationalised Bradford & Bingley. The move has also been financed differently. On Saturday, City watchdog the Financial Services Authority put Bradford & Bingley in default saying the banking group 'no longer met its threshold conditions for operating as a deposit taker'. The group's retail business was then put up for auction and today it was announced that Spanish bank Banco Santander - which already owns Abbey National and Alliance & Leicester - had won the group's savings business, with 2.5 million customers, for £612 million pounds.
Home owners struggling to find remortgage deal
Published on: Mortgage strategy.co.uk. By Natalie Martin.
26th September 2008
Research from online credit information provider Equifax shows that 23% of home owners are having difficulty getting a competitively priced deal.
Some 25% think they have found it difficult to get a good deal because of past defaults on other credit.
While 19% think it's because their property has lost value since it was purchased and 9% think it was either because they have applied for a number of other credit deals in the last few months or because they didn't have a large enough deposit.
A fixed rate remains the most popular option at 54%, followed by tracker/discount and interest only at 16% each.
Equifax found 69% made only one application before securing a new deal with 19% making two to three applications, 21% of those who have remortgaged have done so to help clear their debts.
For those who currently aren't home owners, 28% won't be taking out a mortgage in the next six to 12 months because they wouldn't be able to meet the repayments and 26% because they can't afford the deposit.
Neil Munroe, external affairs director at Equifax, says: "Along with the news today that rates for new deals are going up again, this indicates that consumer confidence is fairly fragile - although there are some glimmers of hope in consumers' attitudes to managing their finances."
Sale and rent back 'a child of the crunch'
Published on: www.mortgagesolutions.co.uk. 8th September 2008
Breaking News
BDRC, a market research agency, has described sale and rent back as a child of the credit crunch, following its quarterly survey of UK private landlords.
The survey examined the growth of sale and rent back, with almost half (46%) of landlords saying they perform a useful function for both homeowners and landlords. Around 5% already own at least one such property, while almost a fifth (19%) plan to increase the number of such properties in their portfolio.
Around 58% of landlords said they were worried that such schemes could be misused, with 64% stating that the system needs regulation.
Mark Long, client services director at BDRC, says "The sale-and-rent-back phenomenon has been born out of the credit crunch. Almost half of private landlords see it as a positive mechanism to help cash-strapped homeowners remain in the same house and avoid further disruptions to their families, especially those with children at local schools."
More Scottish homeowners face repossession than the rest of UK
Published on: ScotlandonSunday.com. By Rosemary Gallagher. 10th August 2008
More homeowners in Scotland are facing repossession than other parts of the UK, largely because of greater exposure to sub-prime and high loan-to-value mortgages, an investment firm has warned.
Repossessions in the UK are now at their highest level since 1999, with the Council of Mortgage Lenders reporting that they reached 18,900 in the first six months of the year, up from 12,800 for the same period of 2007. The number of households with mortgages in arrears for three months or more rose by nearly a third to 155,600 in the first half of this year.
And more homeowners are expected to fall into negative equity as house prices drop. Halifax last week said that prices fell for the sixth month in a row in July, when they dropped by 1.7%.
Bryan Jackson, insolvency partner with PKF in Scotland, said: "If you combine the issues around the credit crunch, historic debt and banks not wanting to lend, then there are going to be more repossessions. "Recently I've come across more sell and rent back companies in the market wanting to capitalise on this."
He said there is potential for a faster rise in repossessions and insolvencies in Scotland because trends tend to lag a year behind England where such problems appear to have peaked already.
Boom time for 'sale and rent back' sector
Published on: businessscotsman.com. By Rosemary Gallagher. 27th July 2008.
THE unregulated "sale and rent back" sector, which involves companies buying houses from owners who need to raise cash quickly, is booming on the back of the credit crunch.
Companies who operate sale and rent back schemes attract customers by promising to buy their properties quickly. However, they generally offer only between 80% and 90% of the value sellers would achieve on the open market.
Many homeowners accept the lower valuation because otherwise they would face repossession. Others reasons for clients wanting a transaction to be completed quickly include relocation or a relationship break-up.
But consumer bodies are concerned about the rapid expansion of the sale and rent back sector as household budgets become increasingly stretched. The Office of Fair Trading (OFT) is studying the need for it to be regulated.
John Fingleton, OFT chief executive, said: "Sale and rent back schemes might be helpful for some but there are a number of potential concerns, including whether consumers in difficult circumstances are making well-informed choices." The OFT expects to report its findings in the autumn.
Please Note :The opinions expressed on this site are given in good faith and should not be taken as legal or financial advice. You should always take professional financial and legal advice before selling your property.
