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Sell and rent back schemes

Find out more about sell and rent back schemes including why they're controversial and what some safer alternatives are if you're struggling to pay your mortgage.

Key points

  • Sell and rent back is an extremely risky option which could leave you without a home
  • Most sell and rent back schemes will buy your property for less than market price
  • Sell and rent back schemes can affect your eligibility to claim benefits

Housing sell and rent back schemes basically enable you to sell your house to a private firm for less than market value, after which you'll sign a tenancy agreement with the company and pay rent to live on at the property.

The schemes are aimed at people who want to stay in their own home but are struggling to pay their mortgage.

Because of this, these operations have been heavily criticised for targeting financially vulnerable people.

It's not an option to take on lightly and can be incredibly risky.

They should be seen as a last resort - and even then that's underestimating how dangerous they can be for your finances.

How to cut the cost of your mortgage

How do sell and rent back schemes work?

As the name suggests, rent back scheme operators buy your home then allow you to continue living there in return for paying rent.

The scheme is usually based on a fixed tenancy term, after which you may still have to leave the property as technically you don't own it anymore.

This decision will be up to the private firm acting as your landlord. Note that this firm could be a company, broker or even an individual.

The price the firm will purchase the property for is normally lower than its market value, so it's likely that you'll end up losing money on your original investment and then start paying rent on the house as well.

Once you're locked into a contract, the firm that now owns your house has the right to raise or lower the rent as they wish, so you could end up paying more than you initially thought.

Rules for sell and rent back schemes

These types of schemes are regulated by the Financial Conduct Authority (FCA) which has imposed strict rules to help those considering the scheme.

These include:

  • Checks to ensure that the former home-owner can afford the new rent payments and that they're aware of the effect it could have on benefits
  • Having a fixed term tenancy of five years
  • Having an independent valuation of the home done
  • Being unable to distribute promotional leaflets
  • Needing a 14-day cooling off period
Taking part in a sell and rent back scheme could mean an end to any housing benefits you currently receive

If you feel that the private firm is breaking any of these rules you should follow its complaints procedure.

If you're still unhappy after eight weeks, or the firm doesn't respond, you may be able to take your complaint to the Financial Ombudsman Service.

Cooling off period

This type of scheme is required to have a 14 day cooling off period in which, if you change your mind, you can get your money back and leave the scheme without any hassle.

After this time it's harder to escape financially unscathed.

Independent valuation

It's important that you get an independent valuation of the property done, as this will help you to accept a fair price from the private firm.

If you think the valuation is lower than it should be, question it.

Alternatives to sell and rent back schemes

As mentioned above, these types of schemes should really be a last resort, if that.

There are alternatives which could help you reduce your debt without having to try this type of scheme.

Sell your house

The most obvious option is to sell your house and rent elsewhere.

The money that you receive from the sale could help to pay off any existing debts and set you in fine financial stead for the next house you purchase.


If the private firm offers less for your house than you owe on your mortgage, your lender can refuse to let you sell it and repossession may be a more viable option for the lender.

Having a property repossessed can damage your credit files for many years, so it's a good idea to make every effort to sell your home before you reach this point.

Speak to a mortgage adviser

If you're having to consider this type of scheme because you're unable to make your mortgage repayments, try speaking to a mortgage adviser who could offer a more manageable solution by remortgaging.

Block of flats

Talk to a debt advice service

If you need more information about how to get out of debt, you can talk to a free debt advice service like the Citizens Advice Bureau or a charity that can help you make steps towards getting out of the red and back into the black.

Eviction from sell and rent back properties

It's still possible to get evicted from a property which you have sold and rented back from a private firm.

This could be a result of:

  • The landlord entering into financial difficulty and the property being repossessed
  • Failing to pay your rent
  • Breaking rules in the tenancy agreement

Rent back schemes and benefits

Taking part in a sell and rent back scheme could mean an end to any housing benefits you currently receive.

Other types of benefits could also be affected, including jobseeker's allowance.

So if you're currently receiving benefits and considering this type of scheme, it's important to think about what impact this will have on not only your finances but also your living situation.

By Abbie Laughton-Coles