Sales and Rent Back Regulation Needed says LettingFocus

I read that The Property Buyers Association (PROBAS) has just been launched with a code of conduct for Sale-and-Rentback - and aims to gain eventual approval from the Office of Fair Trading (OFT) and the Financial Services Authority (FSA), the Government's City watchdog.
But so far PROBAS currently contains just three members and the danger is that unscrupulous operators muscle in.
Many of the companies who do sales and rent back say they can complete a house purchase within days, although the selling period is usually quite a bit longer in practice.
At present, the business of buying houses from people in mortgage difficulties is completely unregulated and there are lots of one man bands in the sector, learning the tricks of the trade from seminar givers at the trade shows – who often make a lot of their money by providing the would-be investors with bridging loan finance so they can seal up good property deals fast.
The fact that PROBAS now exists is good. It’s just a shame it is so late in the day.

One Sided SARB Deals
Whilst the business is unregulated lots of hapless people in debt will become tenants in very one sided deals.
In about 10 years time maybe the government may get round to regulating this. By then it will be too late for vulnerable people who lost their homes.

Horses for Courses
On another topic, one of the questions that vexes me is why do people spend thousands going on a course to learn about buy to let from companies who have terrible reputations for selling properties that are overvalued and won't rent well?
Just a few minutes on google would alert them to the poor performance of many of these players. Journalist Graham Norwood is the latest scribe to do a hatchet job on one of these firms in the weekend press.
So, if you have been mugged by one of these firms and spent £2,000 on a weekend’s course with one of them, please get in touch
Or maybe you think that the £1990.01 you paid over and above the cost of my own book, “Successful Property Letting – How to Make Money in Buy to Let” was £1990.01 extra well spent. If so, again, we would like to know.

About LettingFocus
If you need more advice on where to buy investment property ask me. I’m David Lawrenson from independent property investment experts www.lettingfocus.com
I’m the author of the landlords bible “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
I’m an expert on property letting and a well known writer on buy to let and I contribute to newspapers and a host of property websites, write a property investment blog and run a landlord and tenant advice service - check out my columns for FinancialExpress.net and Archant’s “The Guide” magazine
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my landlord blog and details of my networking, advice, property investors seminar programme at my website www.lettingfocus.com.
What’s unique about lettingfocus.com is that we offer independent property investment mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy we’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Our main site is at www.LettingFocus.com
Copyright: David Lawrenson 2008. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.

SALE AND RENT BACK - CALLS FOR REGULATION

Leading organisations are calling for the regulation of ‘sale and rent back’ schemes.
Citizens’ Advice, Shelter and the Council of Mortgage Lenders have written an open letter to the Treasury calling on it to allow the Financial Services Authority to implement regulation in order to provide protection for consumers.
This all follows exposure of the ‘mortgage rescue’ practice on television and in the press.
In one case, a woman sold her home for under market value to a sale and rent back company which then went bust, leaving her homeless and the house unoccupied.
The programme also showed a novice landlord hawking leaflets around a neighbourhood, offering to buy and rent back properties.

SARB
Under Sale and rent back schemes firms or individual landlords buy property from ‘distressed’ sellers at a substantial discount, with the former owners remaining in situ - but as tenants.
I know quite a few “good guys” who do this for a living and they always have the Home owner’s interest in mind.
These guys point out the drawbacks – one of which is that the owner turned tenant has no security of tenure beyond six months – and another is the fact that by doing this they may not qualify for housing benefit in the future.
However, I know that lots of below market value operators who are not do kind.

Speak to Mortgage Company First
For most people in mortgage arrears the best advice is to speak about their difficulties to the lender, who has a duty of care first.
The Residential Landlords Association adds that it is unfair and unethical to buy a property without an independent valuation.
In another subject, I hosted a great seminar yesterday. We had Paul Grimaldi the author of the top selling book on employing builders called “Getting the Builders In” Paul’s book is the UK’s top selling title on this topic.
You can buy this book from Amazon. Just click on the link to my book here.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the experts on buy to let and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
At LettingFocus I offer independent unbiased advice for property investors covering all aspects of being a landlord and investing in let property.
Buy to let is largely unregulated and there are many sharks in the business of “advising” would be investors.
Unlike most other firms, I am not linked to a property company, developer, estate agency or bridging loan provider. I advise where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to eliminate the risk of getting a bad tenant and more. I have been a landlord and property investor myself for over 25 years.


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If you sell products to landlords and property investors and you have national coverage and would like to be on this page as a partner, please get in touch!
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Copyright: David Lawrenson 2007. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.

Below Market Value Properties and Sale and Rent Back

There is a huge growth in people selling their homes at well below market value to landlords and then renting them back and an industry has grown up where investors buy properties directly from “distressed sellers” in this way.
This is a real human interest story because where someone sells their own property and then rents back under a standard assured shorthold tenancy; the “seller turned renter” usually has no security of tenure.
Also, the seller will usually have sold their property at a low price to give themselves cash and resolve their debt problems.
This explains why there is so much interest from investors, not least because they can acquire a property with “no money down” using what’s called a “closed bridging loan”
I expect the number of people offloading their homes in this way to grow in the coming months as home owners come off fixed rate deals taken out 18 -24 months ago and face remortgaging at higher interest rates.
The investors find the dis

How Below Market Value Investors Find "Motivated Sellers"
These investors find distressed sellers in a number of ways.
One way is by leafleting. The message of these leaflets will be simple and along the lines of: “Do You Own Your Own Home? Do you need to Sell Quickly? Contact 0800 XXX XXX. Another way is by advertising on the internet - many of the 1.9 million sites that are returned when you key in “below market value property” are targeted at people who may be motivated sellers.
In recent years, many companies have been set up which use automated systems featuring call centres to field enquiries and filter out the genuine distressed sellers. They may then charge investors for each “lead” or an affiliate could “buy” the rights to all the leads that come onto his patch.
These leads cost the investor money but it means the person who is not a full time property investor - who has another job – can be “in the game” too.
It will usually be the investor’s job to negotiate with the seller and try to secure a deal to buy the property at a big discount from its market value. Once the deal is agreed the investor sets up a bridging loan for the discounted price and a mortgage for 100% (i.e. for the true value on the same day) – hence generating “instant equity”

Sale and Rent Back (SARB)
The seller now becomes a tenant of the landlord, can stay in his own home and his neighbours are none the wiser as to his change of status. However, he will usually have no security of tenure beyond the initial 6 months term under the standard tenancy agreement.
Clearly there are a few moral issues with the whole process - a process which has been pretty much ignored by the national press.
Many investors I know who do this, say they turn down some deals if they believe the seller could do better by doing something else – say remortgaging, talking to their lender, getting citizens advice help or by selling the property.
However, the question is how many others are as altruistic.
I forecast that in a few years the press and finally the Government will legislate against some of the worst practices in this rather murky business.

To find out more about buying property below market value and the truth about no money down deals ask me.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice for landlords and property investors on a one to one mentoring and coaching basis as well as occasional group seminars.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
So I can give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
We help you make money in property by showing you the ways that work and which are of minimal risk to you.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too.
Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page.
If you are selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!

For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS. What past customers say about us: Testimonials

BUY THE BOOK click here: Buy the Book at Amazon
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