Curb The Sell And Rent Back Cowboys

After years picking up no press coverage companies that offer sell and rent back schemes are now under the spotlight. We have seen a flurry of activity in the press concentrating on landlords who offer to buy house’s and rent it back to the old owners. It has come to light that a few rouge operators in this market have been putting profits before being fair and ethical. A new organization has been created to tackle these sell and rent back cowboys. Founded by Mark Alexander a portfolio landlord who offers a sell and rent back service The National Association of Sell and Rent Back (NASARB) aims to tackle the issues in the industry. NASARB intends to bring together landlords, the banks, charities and local authorities to draft and enforce a code of conduct within the industry.

For most people who have sold their house and want to rent it back their most pressing concern is the security of tenure. Many sell and rent back operators offer only Assured Short hold Tenancies. The reason they do this is that there are few other tenancies which protect their rights as landlords as well. The problem with these tenancies is that once the fixed term is finished the landlord is legally allowed to ask the tenant to leave by issuing a section 21 notice. This obviously leaves the tenant vulnerable to eviction even if they wish to stay in the property. NASARB believe that all sell and rent back landlords should give up their right to serve a section 21 meaning the tenant can remain as long as they want. The landlord can still evict the tenant if they fail to adhere to other terms of the tenancy like paying the rent or looking after the property through a section 8 notice. NASARB also believes that landlords should only put the rent up a set amount per year so tenants are not forced to leave through high rents.

Sell and rent back schemes do offer an important service to those people who want to release equity, escape financial pressures, or sell quickly to emigrate or move. Consumer groups are however concerned that rouge sell and rent back operators wish to get the tenants out as fast as possible to sell the property to make quick profits. Most sell and rent back operators take a longer view and never intend to sell. For these operators having a tenant who treat the house like they did when they owned who intends to stay for a long time sell and rent back tenants are ideal as they mean few rental voids and maintenance issues. These landlords see their properties as an asset that will grow in value over the long term and as such are happy to commit to tenants who wish to stay. NASARB believes that landlords who operate these schemes should be able to prove a track record in renting property and prove they are financially solvent. One of the most talked about cases of a rouge sell and rent back operator is a case where the landlord went bust and their properties where repossessed and the tenants evicted by the banks. By proving that sell and rent back operators are solvent this should cut down these instances. So far two hundred landlords have signed up for the NASARB scheme and they should be meeting in the next few months to draft the code of conduct.

One of the first to join the scheme was the managing director of Homebuyer Financial Solutions, Andrew Wilkinson, who represents thirty sell and rent back landlords. In a statement from him he said “the sell and rent back industry has taken a battering in the press over the last few month. As always the actions of a few has spoiled the industry for many ethical sell and rent back operators. People who are looking at a sell and rent back scheme should be aware of the pitfalls and talk it through with the person who is buying their property. By asking questions like how will my tenancy be secured you will get and idea of the people you are dealing with. Ethical sell and rent back operators can also provide references from people who have taken up the sell and rent back option. At Homebuyer Financial solutions we also talk about the other options that are open to our clients. We give them all the facts and highlight the pros and cons of each option. It is then down to the client to decide which product best fits their needs.” Lets hope then that NASARB fulfils its ambitions in clearing up the sell and rent back industry.

Seed Newsvine

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