Glossary: Sell-and-rent-back schemes
Sell-and-rent-back companies buy people’s homes for less than the market value (typically 70%), paying all fees and costs and then rent the property back to the original owners. For many householders with debt problems facing repossession, this seems like a good idea as they can use the cash to settle any existing mortgage and outstanding debts, while remaining in their own home. Allowing for selling the property for considerably less than its market value, the major disadvantage surrounding sell-and-rent-back schemes is that they are completely unregulated, so there are no guarantees about the security of tenancy or the cost of the rent.
A homeowner’s worst nightmare; repossession is an action of last resort by mortgage lenders to recover money from borrowers that have failed to keep up with repayments on their mortgage or other loan secured on their home (see secured loan). Repossession is a legal procedure that has to go through several processes before the homeowner is evicted and the property reposed. These are: if a borrower keeps defaulting; the lender applies for a solicitor’s notice; the lender instigates possession proceedings through the court; at the court hearing a possession order is granted and sometimes a possession warrant; a bailiff is appointed and an eviction notice issued at which point the homeowner has two to three weeks to vacate the property.