Buying back your home. Some prospective clients express an
interest in the possibility of buying back their property. A sell and rent
back scheme can be a temporary measure. Perhaps you fully intend to step back
onto the property-owning ladder when the time is right. For other clients
the move out of home ownership is a deliberately long term or permanent move.
The feasibility of a rent back then buy
back hinges on your circumstances and the terms offered. Buying back your
home is clear more likely if the price is set at a level which gives you
every opportunity of buying back your home. All that we ask is that you let us know
at the outset what your likely plans are so we can agree terms at the time of sale.
Our aim is to make buying back your home as affordable as
possible. Buying back your property doesn't
have to be out of reach!
We offer two ways of setting the future sale price.
Option one for
buying back -
The first means of buying back your home is
to base the buy back price on a pre-agreed discount
from future market value. But because property prices can go up or
down this is subject to a minimum value.
For the sake of
fairness and simplicity the discount applied is usually the same as we use
to buy your home in the first place. For example, if we buy your property at a 25% discount to
its open market value, your buy back option would also be set at a 25%
discount to open market value.
Option two for
buying back - flat price
Alternatively, we can set the price today. When setting the price
today, the buy back price will usually be based on the price we pay
for your property.
The time frame during which you can
buy your property back is generally between two and six years. But
if you'd like an alternative arrangement - just ask.
Tips for buying back
Be realistic when negotiating the terms for
buying back your home. The sell and rent back specialist needs to make a
reasonable return. From your perspective the terms offered need to be as
fair as possible.
Why are you renting back? If you're planning
on renting back for mainly financial reasons you'd do well at the outset to
give thoughtful consideration to whether you're likely to be able to afford
to buy your property back in the future. It's unwise to pin all your future happiness on a
buy back option unless you sure of your future earnings.
If your concerns stem mainly from making the
wrong decision, ask your buyer whether there are any options for "opting
out" of the arrangement. Some companies will allow you to reverse the
agreement during the first year or so.
Sometimes the possibility of buying back your home is one of
the main attractions of renting back in the first place. Indeed for some clients
the option to buy their property back is essential. Without
some form of guarantee they probably wouldn't enter into a rent back arrangement in
the first place.
Under these circumstances it is
straightforward enough to draw up a contract protecting your right to buy
your home back in the future.
Other things to watch for if you're
planning on buying back your home out include making
certain the formula on which the buy back price is based is agreed
up front (even although the price itself may be unknown) and clarifying whether there
are any time-based restrictions on your buy back option.
Once the terms of the agreement are
finalised show them to your solicitor to clarify any additional steps you
need to take, if any, to safeguard your agreement.