There has been a lot of comment recently about the plight of people who, in the face of financial hardship, sell their homes at a discount and believe they will be allowed to remain in that home as tenants for a long period.
Most newspapers contain adverts from firms offering so-called ‘rescue packages’, commonly known as sell and rent back schemes.
Sadly, more often than not, it is simply a scheme to obtain property way below the market value and little thought is given to the people who occupy it.
There has always been a place in the market – albeit a small one – for trading in reversionary interest in property, a true lifetime tenancy benefiting the occupant.
This is limited in its appeal to investors as it would not, under current rental agreements, return a rental income consistent in the long term with assured shorthold tenacies.
We will always have some who seek to profit from the misfortunes of others. Regulation works in financial services, where clients are advised in good faith and with a high degree of knowledge as to their options. To consider regulation of firms proposing to gain from property speculation is unworkable. The time factor for those forced to relinquish the equity in their home makes it so.
The real solution to the problem lies not in regulation, but in legislation. Just as the now-familiar assured shorthold tenancy was introduced, we should now create a sell and rent back tenancy agreement.
I don’t believe all of these agreements should be lifetime tenacies, but they should be for a term of years, perhaps depending on the number of years the tenants have occupied the property or their age. This might also allow a viable alternative for senior citizens contemplating an equity release deal.
The point is that it would be transparent and supported by legislation. The only losers would be those seeking to make people homeless for their personal gain.
Tom Douglas
Tom Douglas Property Services
