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Sale-and-rent-back should always be a last resort

House being sold

If you’ve ever been stuck at home watching daytime TV, you’ve probably seen an ad for sale-and-rent-back schemes. They may seem like a good way out of a financial hole, but our research suggests otherwise…

If you’re feeling the pinch and struggling to meet your mortgage payments, sale-and-rent-back schemes could look like an attractive option.

A company which is willing to buy your home and then rent it back to you so you don’t have to move – what’s not to like?

Approach with caution

But these schemes should be treated with caution as there are plenty of catches. The company won’t pay you anything like what your home is worth – 70% of market value or less is about normal.

And although new Financial Services Authority (FSA) rules mean you must be given a minimum of a five-year tenancy, there’s nothing to stop the landlord putting the rent up at some point during this five years. If you struggle to pay the rent, you could find yourself facing eviction.

If you think sale-and-rent-back could be for you, there are a few steps you can take to try and ensure you’re making the right choice. For a start, choose a firm which is authorised by the FSA – when Which? Money investigated these firms recently, we found a few selling sale-and-rent-back schemes which weren’t authorised.

Get the basic rules right

If authorised firms are following the FSA’s rules, they should make sure a sale-and-rent-back scheme is appropriate for you and explore alternatives before you sign on the dotted line. If you’re over 55 for example, you could be better off looking at an equity release scheme.

It also makes sense to know as much as possible about the schemes: our guide to sale-and-rent-back is a good place to start.

Regulation was put in place to protect people taking out a sale-and-rent-back scheme, but our investigation shows that too many firms aren’t even getting the most basic rules right. We’ve reported them to the FSA but it would be great to get more evidence.

So what are your experiences? Have you, or someone you know, taken out one of these schemes – and if so, how did you find it?


I would agree. It is very, very expensive. You are selling your property for less than it is worth and will then end up paying the equivalent of the new owner’s mortgage.

Down-sizing would make more sense.