A housing solicitor is warning home owners who are facing debt problems to be wary of signing up to schemes which buy their home and rent it back to them, after a St Helens mans faced homelessness.
Joanne Murray, a Partner at Stephensons Solicitors LLP in St Helens, represented a man who had entered into a sale and rent back scheme following the death of his wife.
Some people see this as a convenient way to remain in their home when circumstances change and they need to release funds. But as the man discovered, when he couldn’t keep up with the rental repayments due to a change in his circumstances, the threat of losing his home drew closer.
Joanne Murray said: “This man came to us for help as he didn’t know where to turn to advice. He’d fallen behind with his rental payments and began to receive text messages from his landlord, threatening that court bailiffs would come to his house. They also sent a claim form saying he had to leave his home.
“When I investigated, we found they had issued the incorrect proceedings and we were able to issue a counter claim with the court for breach of quiet enjoyment of the property. In addition, we helped him to access the housing benefits he was entitled to, which he had no idea he was entitled to receive as he had previously worked his entire adult life. This meant he was able to keep up with his rental payments once more.
“I would urge people to enter into these schemes with caution. Properties sold under these schemes are usually for less than the market value of the property, typically 70%. Considerable charges and fees are also often deducted from the amount of capital which the seller ultimately receives.”
In the client’s case, an agreement was reached with the landlord that both parties would stop their proceedings, on the basis that they would write off his rent arrears and start again. They have done so and he is now back on track and able to remain in his home.
In 2010, the Financial Services Authority imposed regulations on businesses offering sale and rent back agreements which it is hoped will reduce the number of people left homeless. Most notably, they introduced a requirement that all agreements must include a five-year fixed term tenancy period. In addition there is now a 14-day cooling off period should tenants change their mind about the transaction and there are much stricter rules about the way such schemes are advertised.
Stephensons has one of the leading Housing legal teams in the region, which is recommended by the Legal 500, an independent guide to the legal profession.
The firm has a specialist quality mark from the Legal Services Commission for housing cases, which means it can often provide assistance free of charge, subject to qualification under the legal help scheme. The firm can be reached on 01616 966 229.
ENDS
Notes to editors
The latest edition of Legal 500 ranks Stephensons as a top 60 UK law firm and the fifth largest legal practice in the North West. The firm has 30 partners and more than 350 staff in Manchester, Wigan, Bolton, Leigh and St Helens.
Media information: Lianne Tracey
Stephensons Solicitors LLP
T: 01616 966 229
E: lianne.tracey@stephensons.co.uk