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Flash sale property companies
Faced with repossession and the corresponding costly black mark on their credit rating a growing numbers of homeowners are turning to a new group of so-called "flash sale companies". The past couple of years has seen a huge increase in the number of flash sales companies – predators who offer to pay cash for a distressed homeowner’s property at a typical discount of 20% to the open market value in return for a fast sale. Some offer to rent the property back to the former owner-occupier – but often for no longer than six months. This service is designed to help people whose homes are being repossessed, long before they are sold at discounted prices at auction.
Rapidly expanding though it is, the flash sale market may be short-lived. It is underpinned by rising interest rates and soaring house prices. When prices crash, a fire sale will struggle to help anyone as, after the discount, the payout may not clear the mortgage.
This section of the market has no regulation and no code of conduct. Anyone thinking about using such a company should seek independant advice e.g. from Citizens Advice. Key points to consider are have you a written agreement over how long you can live in the property for and have you also a written agreement on how much rent you will pay. If not you may find yourself forced out of the home after six months by a dramatic rise in rent. You mind find it better to leave your old home and rent on the open market.