Leaseback Schemes in the UK

What is a leaseback scheme and how can this help you pay off debts? The benefits and the negatives our outlined below:

Many homeowners in debt are turning to sale and leaseback schemes to release capital in their property to pay off debts.

Mortgage release companies offer to buy the property for a discounted price to release capital in the property to allow people to pay off debts. You then enter into a tenancy agreement with the company and stay in the property paying a nominal rent. Meanwhile the company becomes the new legal owner and pays the mortgage.

However, if the mortgage company gets into financial difficulty as can be seen in a spate of cases in America and more recently here, you may find yourself powerless and homeless when your house is repossessed.

This area is unregulated and there is no code of conduct or guidance offered.

There us no guarantee that you will get proper value for your property or are allowed to stay in your property. The tenancy agreement might only be for 6 months and at the end of that time you might find your tenancy comes to an end and you are homeless.

Seek advice before approaching these companies/entering these schemes

SPEAK TO REGULATED Insolvency legal advisers IF AT ALL POSSIBLE. The credit management industry is notoriously unregulated and this can make it difficult to obtain good advice.