Very Quick House Sale

There is no doubt that banks and other lenders are making it more difficult to borrow money to finance a mortgage. Thousands of consumers across the country are starting to realise that loan companies, banks, credit card companies and mortgage lenders are slowly choking the supply of available cash.

First-time buyers are finding it more difficult to save a reasonable sized deposit, and even when they do it can sometimes be a strain to get a reasonable mortgage offer. In addition, many first-time buyers, who took out their mortgage two or three years ago, find it difficult to place a remortgage.

This all this began, last year over in America, with the so-called sub-prime mortgage crisis. This crisis rippled around the world, as many of the companies who were putting money into this risky market, were based all on other continents including Europe and the UK.

Because so many mortgage lenders lost so much money in the crisis they either don’t have the money to lend or are nervous about current lending conditions. All is not lost there are still lenders out there who can assist with mortgages and remortgages it is often just a matter of finding a competent broker.

One aspect of this crisis is that many people are turning to different measures, including the much talked about sell-and-buy-or-rent-back deals. Research has shown that where there is an affordability gap these types of deals that particularly popular, especially with younger mortgage holders.

This is a relatively new idea; even a few years ago no one sold their home, to a company then rented it back. These days its a huge business with a sizeable share of the mortgage finance market.

These schemes can be a good solution for many people having problems but the sell and rent back system but there is no doubt that this controversial way of holding on to your home is not for everybody.

There are many reasons why people turn to this system, usually when they are in a large amount of debt. They may take this option, rather than being repossessed or perhaps they’re getting divorced, and can not afford the mortgage on their own.

If done through a reputable company the schemes can prove useful, although there are some less savoury operators in this market.

Last month, the dramatic change of heart by lenders, who pulled back from the under 125% mortgage market. Many companies that this within the space of just a few days with implication that they’ll feel that this is now a difficult market.

This way of holding on to your house may be of benefit to many people. What is essential to find a respected company to deal with this extremely important transaction.

It should also be pointed out that there are other options such as debt consolidation mortgages and general second mortgages that can be of great assistance to many people who are having difficulties.

Sell and rent back should possibly not be the first choice for most people. Having payment difficulties or debt problems, a second mortgage may be slightly difficult to obtain, but they are available from reputable brokers.

The advertising watchdog has banned an advertisement that suggested the fastest way to avoid repossession is to sell your home.

The Advertising Standards Authority decided Land & Property Bank.com Ltd’s advert placed in local press was ‘likely to mislead by omission’.

It received complaints saying statements such as ‘the simplest way to avoid repossession is to sell your home’ and ‘you can remain in your house for as long as you require’ would give the wrong impression, and ignored that there were other ways for people to avoid repossession and tenancies being offered were on a short-term basis.

Homeowners were told in the advert: ‘Local company offers homeowners fast solution’ and invited to: ‘Cash in on your house without moving’.

The ASA decided these claims and others, such as ‘equity can be raised quickly through fast property sale’ and ‘one telephone call to Land and Property Bank.Com Ltd was all it needed to solve the problem’ did not make it clear terms and conditions were attached to any agreement.

‘We considered that the advert, therefore, could exaggerate the desirability of that option over and above other options, such as negotiating with a current mortgage provider, selling on the open market or (for older homeowners) using a regulated equity release product, depending on circumstances,’ the ASA ruled.

‘We noted we had not seen evidence to show that tenants could always remain in their home for as long as they wanted to.’

It also agreed the advert was not clearly marked as an advertisement as it appeared in the form of an article with the heading ‘Cash Crisis?’ followed by a by-line ‘exclusive by John Rea’. Although, ‘advertisement’ was at the top of the page printed in small letters it was ‘considered this was not sufficiently prominent to avoid giving the impression that the advert was a piece of journalism rather than a marketing communication’.

Land & Property Bank.Com Ltd told the ASA it agreed there were other options for people and this was clearly explained to potential clients when an inspection and consultation on the property was carried out.

The organisation also said it had a number of options available for those who entered an agreement with them, from a one-month licence to life tenancy. It believed the advert was easily identifiable as a marketing tool because of the word advertisement at the top of the page.

The Office of Fair Trading (OFT) has taken action against twelve companies in the sell and rent back (SARB) market, over statements they made in their advertising.

The OFT asked the firms to substantiate claims made in their adverts or change them.

The resulting action by the OFT has now led to three companies no longer offering the service, six have removed their websites, and a further three have made amendments to their website. Two more have been reported to the FSA.

A key point of contention were claims that residents were able to live in properties for life after they have sold them under SARB, else benefit from low rent, or buy back their homes at any point.

The Sell And Rent Back market has been flooded with opportunists over the past year, resulting in threats to consumer interests and the potential to be exploited by unscrupulous businessmen.

This is especially as they seek to build up property investment portfolios during the downturn, by trying to tap into the market in Below Market Value (BMV) properties.

The result has been a situation open to abuse, with lack of controls to protect consumer interests.

The FSA has already announced that the market will become regulated from next July, a move broadly welcome by established SARB companies who already have a long-standing presence in Britain.

Accordingly to Jason Shaw at MPG Investments, “The industry in general has suffered a reputation problem, after opportunists began moving away from the buy-to-let market. Unfortunately, this meant that a number of individuals and small companies sought to exploit debt in a way that should never have been considered acceptable.”

“That’s why we’re happy that the FSA has finally stepped in, to ensure that all companies in the sale and rent back market are forced to operate at the same level of professionalism that MPG has insisted on for over five years.”

by Brian Turner