Sale and rent-back firm launches five year AST

A five-year Assured Shorthold Tenancy agreement has been launched by a sale and rent-back firm.

Residential Property Solutions has launched the scheme,  ahead of FSA regulations which come into force at the end of this month and which will clamp down heavily on the controversial sector.

The new scheme, which replaces the firm’s existing sale and rent-back product options, enables tenants to have the security of a five-year AST. They will also have a legally binding option to buy back their home at any time during the five years.

The downside of sale and rent-back has not, however, gone away: home owners wanting to sell will have to accept a huge hit on the price of their properties, with Residential Property Solutions offering up to 75% of its value. 

Pete Thomson, managing director, said: “The CML’s latest repossession figures confirm that approximately 50,000 home owners will have their properties repossessed this year. To date, the government mortgage rescue scheme has helped just 628 home owners, and lender forbearance schemes have simply delayed the inevitable.

“If a client is experiencing financial difficulties, our new fully compliant sale and rent-back scheme gives them a five-year window of opportunity to get their finances back on track, without needing to move home. Surely, that has to be an option well worth exploring.

"The sale and rent-back market is about to become fully regulated. It provides home owners facing repossession with a practical solution to their financial predicament.”

Although sale and rent-back is frequently thought of as a solution for home owners facing financial difficulties, RPS says that many of the applications it receives do not involve financial distress.