Choosing to Sell and Rent Back your property is a huge decision for any home owner to make. It is important to consider not only the short term benefits but also the long term implications for you and your family. This article provides 12 things you should think about when selling and renting back during the current credit crunch.
If you are thinking of Selling and Renting Back during the Credit Crunch it is important to Understand the Current Market Conditions and that they may make it more difficult to find a suitable Sale and Rent Back solution. Property values have dropped significantly, and less availability of finance means Sale and Rent Back companies are often not able to offer as much for properties as they could prior to the Credit Crunch.
Make sure you will not be charged more than the Fair Market Rent for your area. In the current market there is more demand for rental properties, as less people can afford to buy, so rental values are slowly increasing. This doesn’t however mean you should be paying a premium rent. Most reputable and financially stable Sale and Rent Back Companies should have a policy of not charging more than fair market rent.
Can you Afford the Rent that is being offered? This is an important question to ask yourself when agreeing to a Sell and Rent Back offer during the Credit Crunch. All household expenses seem to be on the increase, so make sure you are not going to be over-committing yourself. Remember if you don’t keep up with your monthly rent payments you may be asked to leave your home.
Ask for (and make sure you get) a Guaranteed Rental Period that suits you. Make sure it is the intention of the Rent Back Company to keep you in your home as long as you want to stay there. If you want to stay long term/indefinitely make sure that there are no break clauses in the tenancy and that you always have the right to renew at the end of each period.
Ask and make sure you understand how future Rent Reviews and Increases will be calculated. When are these to take place and what factors will changes in rent be based on?
Choose a reputable Rent Back Company that you trust. Remember you will most likely have a long term relationship with this company, so it is important you like and trust them to do what they say.
In the current market it is vitally important to make sure the Sale and Rent Back company you are dealing with is Financially Stable. Many smaller companies or companies who buy and sell properties may end up facing financial difficulty themselves. If a Sale and Rent Back company was to go into liquidation you would be left with no protection, and in danger of being asked to leave your home.
Make sure you have the Option to Buy Back your property in the future (once you are back on your financial feet) and understand how this will be calculated.
Make sure you understand and agree to the Terms of the Tenancy Agreement. Check what you have to adhere to in the Tenants Rights and Responsibilities. And also what the Landlord will cover in the Landlords Rights and Responsibilities.
Don’t pay any Fees! You shouldn’t have to pay anything when you Sell and Rent Back your home. Be especially wary of companies asking for an upfront “survey fee”, they may be using these fees to fund their own cash flow during these difficult times.
Remember to always Get Everything In Writing. The offer (purchase price and rental), the length of tenancy (and whether this can be renewed), all details of the tenancy (including rent reviews), the buy back option and anything else you agree to should be provided in writing.
If in any doubt seek Independent Legal Advice. If you are unsure about any Sell and Rent Back agreements or documentation make sure you have it explained to you by an impartial third party before signing.
