The last year has seen a huge number of 'Sell and Rent Back' property companies spring up in the UK. They seem to offer an ideal solution for people in mortgage difficulties, but the truth is often quite different. In this article, I'll explain what they are and why you should be careful before committing to a sell and rent back deal.

Sell and rent back companies target people who are in difficulties with mortgage arrears and who are in danger of having their homes repossessed. They'll make you a cash offer for your home and then allow you to rent it back from them and continue living in it once it's sold.

Unfortunately, many of the companies in the sell and rent back market can best be compared to vultures circling the scene of a road accident. They're only in it for a quick profit and you may end up losing far more than you expect to.

Sell and rent back schemes have three main weaknesses you should know about before entering into any negotiations:

Are You Getting A Fair Price?

Sell and rent back companies obviously have to buy your house below market price - otherwise they couldn't make a business out of it. However, you need to make sure you get a fair valuation of your property and don't get conned into accepting a sale price of just 50% - 60% of your home's true market price.

Make sure you get an independent valuation (e.g. from an estate agent) as well as from the sale and rent back company\'s surveyor.

What Kind of Tenancy Agreement Will You Have?

Many sale and rent back companies will promise you that you can rent your house back from them 'for as long as you like'. In practice, these promises are worth nothing and are not legally binding. The only thing that counts is your tenancy agreement. These are usually what's known as an 'Assured Shorthold Tenancy' and will be for 6 or 12 months only.

After this period is over, you can be evicted. This is a common problem as sell and rent back landlords often just want to resell the properties they buy for a quick profit.

You May Not Be Eligible For Housing Benefit When Renting Back

A common sales tactic for sell and rent back companies is to claim that you will be able to get benefits to help with your rent once you've sold your home to them. This may not be true.

According to the Citizens' Advice Bureau, you won't be entitled to Housing Benefit if you or your partner have been the owner of the house in the last five years.

What Should You Do?

If all of this has put you off the idea of using a sell and rent back service, then you aren't alone. Fortunately, there are practical alternatives that you should consider first, such as:

· Ask your mortgage lender if you can take a payment holiday or lengthen your mortgage

· Switch to an interest-only mortgage

You should only choose sell and rent back as a last resort - if you need to sell, you should ideally do it yourself on the open market. You'll almost certainly get a better deal that way.

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