Why We Are Not A ‘Sale and Rent Back’ Provider

Sale and Rent Back (SRB) is the name given to a scheme common in the 1990s and early 2000s whereby a property owner sold their home to a company or individual, and then remained at the property as a rent-paying tenant.

This industry was widely discredited, with mounting concerns that some of the more unethical providers used the scheme to buy cheap property then immediately evicting their client, or charging unreasonable rents until they moved on. Consequently, the Financial Conduct Authority took action and began regulating this industry in July 2010. The service that we offer to our clients has no common features with Sale And Rent Back, with the one exception that the property owner remains in the property once they have sold it.

According to the regulations and the Financial Conduct Authority, an arrangement under SARB must have the following characteristics:

• Payment of rent
  • There must be a payment of rent, or payment in kind, from the property seller to the new owner. We do not ask for any payment at all, and impose no charges or obligations on our clients for 12 months from the date of sale. Clients act as a caretaker, looking after the property for us for 12 months, at which time there is freedom of choice to repurchase the property from us or move on. At no point do we ask for any payment from our clients.
• Tenancy Agreement
  • To fall within the SARB criteria, there must be a tenancy agreement of some sort (usually the AST; the standard landlord’s contract) in place after the sale of the property. We do not have a tenancy agreement at all. A caretaker contract is signed giving clients the legal right of tenure for the 12 month period, and outlining our obligations in regard to the property, but no tenancy is entered into.
• Limited security of tenure for clients
  • One of the problems with a standard tenancy agreement is that tenants can be evicted from their property for any reason with 4 weeks notice. Our clients have guaranteed security of tenure for 12 months, with the only grounds for eviction in this time being if the client gained a serious criminal conviction, such as using the property for the manufacture and sales of drugs.
• Implied rent
  • This is where, instead of charging rent, some companies and individuals drastically reduced their offer price in order to use the saving to pay rent, so in effect the client pays 12 months rent up front. We do not do this, and have structured our finances to make this unneccessary. Although we do try to buy properties at below their market value to cover the increased costs that transaction speed bring, we do not ask for extra discounts for this service, nor do we make profits from these clients.  We provide two services (cash purchase and repossession relief) in order that we can use the profits from one product (cash purchase) to finance the repossession relief, which we aim to be cash-neutral.

We are very mindful of the relevant legislation, and have made every effort to comply with both the letter and the spirit of the law. If you do have any questions regarding this though, please do contact us using the link above.