Stuart Rathe warns of sale and rent back

Nov 20 2007 by Vicky Anderson, Liverpool Daily Post

THERE has been huge media interest in recent weeks in so-called “sale and rent back” schemes, where companies purchase properties for up to 60% below market value.

These companies generally give no security to the occupier beyond a 6 to 12 month tenancy.

They are typically used by vulnerable people in financial difficulty.

However, a clear distinction should be made between these dangerous sale and rent back schemes and safe, regulated equity release schemes for older homeowners.

Any older homeowners considering release of equity from their home should think about the following issues: Consider other ways of improving finances such as downsizing or using existing savings, and always seek independent financial advice.

Discuss your plans with children or other family members if you wish to do so and check your welfare benefits will not be affected by the money released.

Make sure the equity release provider is a member of SHIP (Safe Home Income Plans), as this will guarantee a right to remain living in the property for life, or until entry into long- term care. It also means that the amount to repay the equity release can never exceed the value of the home.

Never sign any documentation relating to your home without the advice of a solicitor. In fact, SHIP schemes will not release any money to you until a solicitor certifies that you have understood the paperwork.

STUART RATHE is aŠpartner atŠLees Lloyd Whitley.