Monday, September 3, 2007

Sell To Rent

Concerns over repossession rents

The property business never stands still for long before a new species of entreprenuer or shark appears. The latest stage of this evolution has created companies that buy properties, (typically those that can't sell) and then rent them back to the seller. However, there is concern about the lack of any regulation governing this practise and some homeowners are simply being conned. In one case highlighted by a Citizens Advice official an elderly gentlemen sold his home for £40,000 even though it was valued at £165,000.

Posted by denzil @ 10:06 AM (3494 views)
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10 thoughts on “Sell To Rent

  • crash bandicoot says:

    “Victoria Taylor lived in her home in Wolverhampton for 26 years, but was unable to meet the mortgage repayments after her partner left her.”

    I don’t know about you, but when I have lived in my house for 26 years my mortgage will have been paid. I believe Ms Taylor may have been partaking in some extra secured borrowing along the way.

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  • Cheekie Charlie says:

    “There was just no other way out if I wanted to keep the house”
    It’s not your house love, you are a tenant!!!

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  • This article has been posted before, but for those who missed it last time it’s worth a read. It shows it’s not just the greedy and irresponsible who suffer at the hands of amoral salesmen and the companies they work for.

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  • Good point CB – she has indeed been raiding the piggy bank!

    But not only that – this article gives more details about her case (posted over the weekend): http://news.bbc.co.uk/1/hi/business/6972967.stm

    She couldn’t afford her £325 per month mortgage repayments, but some of the companies she looked at were going to charge her £475 to £500 p.m. rent! Even presuming the company she actually went with offered a better deal than this, it can’t have been THAT much better, surely, so her rent must still be virtually the same, or higher, than her mortgage repayments were. Which suggests to me that she had other debts to clear on top of her mortgage, even despite her MEWing – I bet she has a lovely plasma telly!

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  • crash bandicoot says:

    I missed this at the weekend so I’ll pitch in now.

    “Had there been another way out I wouldn’t have done it, but there was just no other way if I wanted to keep the house.”

    There are two things about this that speak volumes. Firstly nobody made her sign the paperwork. Somebody put a deal in front of her and she accepted it. If she could have got a better offer elsewhere then she should have taken that. Secondly the easy solution would be to sell the house on the open market and get the full “market value” for it. I really am truly sorry her her and everyone in her situation – but if you have agreed to a mortgage that you can’t afford then you can’t stay in your house. This is what is meant by “your home is at risk”. I am sure that her story won’t be the last of this type that we hear. Sadly there is a human cost to a HPC.

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  • Guys

    Do you not think these companies are going to cause a problem for us as these guys will be worse than the BTL lot. They will buy up the houses not sell them and just hold on to them to appreciate in value!!!!!!

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  • dohousescrashinthewoods says:

    Did anyone see the programme on debt last week? Simple stuff but you begin to get a feel for the human cost.

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  • Is is possible that Ms Taylor didn’t have any/many additional debts but was told something like this:

    “I know the rent will be higher than your mortgage repayments, but you’ll have £50,000 to pay it with. Look, Love, all your friends are in this street and your alcoholic/womanising partner has just walked out on you. You’re gonna need support from your neighbours. You know it will be much easier if you stay here, don’t you? It will be much better for you, Vicky, Love. Trust me! It’ll be alright”

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  • [email protected] “Do you not think these companies are going to cause a problem for us as these guys will be worse than the BTL lot. They will buy up the houses not sell them and just hold on to them to appreciate in value!!!!!!”

    In a word, no!

    When they buy up these properties for £50k, the sales will have to be processed through the Land Registry just like any other sale, and so will therefore depress the House Price Index figures, which would help re-enforce negative sentiment in house prices – fine by me. Also, “Holding on” to houses does not make prices go up – average sale prices are only affected when properties are actually bought and sold! I would think, though, that if these companies see the market falling and would rather take capital gains now than have to wait for a recovery in X number of years, they could be inclined to sell as soon as their poor victims’ 6 month tenancy is up; even if they have to sell below market rate to get a quick sale in a falling market, they will still have made a profit because they got such a large discount in the first place. This will also help depress “average” price indices. These firms will help HPC along, not prevent it.

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  • These cut price buy-to-let people are driving prives down because they’re buying with a sitting tenant and hoping to make their money from the rent. The householder sells the house for less than it’s worth so they don’t get evicted.
    The typical BTL is the other way round – loses on rent but gains on long term capital growth (in their dreams).

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