Selling family property to rent it back? Do you own more than one
family property? Are you under pressure
to sell a family property you'd rather hang on to? Perhaps it's
important who you sell to or you want to sell but only with specific
conditions attached? When property prices could be counted on to rise
year after year some families acquired property on behalf of relatives.
Others simply didn't sell their residence when they moved to their next
The net result is that
many homeowners now own more than one property. Parents rent to their children
or children rent to their parents. Some don't charge any rent at all.
But priorities change.
If you own more than one family
property there may come a point when you'd
prefer to free up some cash or need to pay off a mortgage. If you'd
prefer to sell your property but let your relatives remain, we may be
able to help. Selling family property to rent it back allows you to sell
to get your cash, but just as importantly your family can continue to have
the use of the property.
It is possible to sell a family property and
rent it back from
a reputable sell and rent back provider. You free up your cash and your
family gets the use of the property for the lifetime of the agreement.
There are many reasons why you may prefer
to sell now. Perhaps you're intending to move home yourself and need
to consolidate your cash to finance the move. Or perhaps you're simply
coming to the end of the mortgage term. Or have reached a stage in your
you want to do other things with the equity tied up in the property. Selling family
property to rent it back,
might be the compromise that lets all parties move on with their lives.
Whatever the reason, selling a family
property to rent it back isn't like an ordinary house sale.
Usually properties are sold on the open market (through estate agents or
possibly solicitors in Scotland) for the highest price achievable.
Selling family property to rent it back
the property is not being sold with vacant possession - someone is
remaining in the property and that precludes selling on the open market.
These conditions mean you need to sell to a "safe pair of hands" who'll take on the
commitment to keep someone in place for the lifetime of the agreement -
usually long term.
rent it back - how it works
Selling a family property to rent
it back is based on the premise that the person (or company)
buying the property takes on a commitment which allows you or a family
member to remain in the property as a tenant.
From your perspective the two major
drawbacks of selling a family property to rent it back are likely to be that you will not receive the full market value for
the property and that the arrangement is likely to be (but not always) for a fixed period
Other useful things to know about
selling a family property to rent it back? The key point
to realise is that
the purchase price and prospective rent are linked to some
degree. Put another way, the higher the price, the higher the buyer's
costs going forward. Logically the higher the price the more rent is
required to cover the costs.
Moreover by not paying the open market value of the property
the buyer is able to retain the property long - term - there is no
pressure to re-sell.
Selling family property to rent it
back will only work if terms can be agreed that suit both parties. In most cases we find there are a number
of price/rent combinations that can be offered. You just have to find the combination that
works for you. The majority of clients tend to opt for the price which
delivers the lowest rent.
Other benefits and safeguards
Other benefits which can be built into
an arrangement for selling family property to rent back include allowing
family members to buy the property back in the future on favourable
terms ie at a discount to the market value at the time of sale. It is
also possible to incorporate a no quibble "cooling off" period such that
the arrangement is completely reversible without penalty during the
first year or two, depending on the length of the agreement.
To find out more about how selling a
family property to rent it back works call
0669 or submit the form below.