sell house and rent it back

Hello everyone,

I'm new here and apologise if I am rehashing old material. I did read one thread on selling a house and then renting it back from a company and know the views were negative. However, I still cannot keep from wondering if it might be applicable in my circumstances. Apologies also for the length of this message, please feel free to ignore.

I am divorcing after a 10-year marriage. I had bought my house and also put several thousands into improvements before I met him. I also put all my inheritance into the house and only had £7000 outstanding on the mortgage when I met him, a sum which has stayed constant since because I have an interest-only mortgage. I have security issues due to past history, so have always concentrated on saving for the future. It has been even more important to have a financial cushion since I left employment to do freelance work.

My ex is a wastrel, who never bothers to save and spends his money on flash cars and other stuff with which he can act the poser he is. The net result is that I have a house worth £120,000 and also £80,000 capital, while he has little or nothing in assets. He is in rented accommodation, while I am in a house with minimal mortgage fees (about £40 per month. Against that, he earns 1.5-2 times as much as me and, being fully employed has employer pension contribution, sick pay, bonuses etc, whereas if I was unable to work for any time due to illness, I would get nothing and would still need to pay fixed house and business outgoings and feed myself, so would need to dip into my capital.

He has said he is going for half my assets and will spin out the court proceedings so I lose the maximum in legal fees as well.

So, as I see it:

If I sell my house on a rent-back basis
1. I will only get 80% or less of the market value, however, this will diminish the size of the assets against which he is claiming.
2. There will be a fixed sum obtained from the sale of the house to factor into the equation rather than an inflated valuation from an estate agent.
3. Until a settlement is reached, all the capital I receive will be mine, and the interest gained will cover a significant part of the rent.
4. Since I will be paying a market-based rent instead of tiny mortgage repayments, my outgoings will become similar to his, but with a much smaller income coming in. Presumably this will allow some of my capital to be offset against his higher income, as will the fact my income could vary a lot, and I do not have sick pay, guaranteed pension payments, etc.
5. The house is in a poor condition, but I will have its essential maintenance assured by the landlord (e.g. the boiler could well break down next winter since it already makes large banging sounds, the roof has loose tiles and might start to leak).
6. Once a settlement has been achieved, I will hopefully have some of the capital left to put into a new house, and could then raise a mortgage for the additional sum needed.
7. The move would not entail any agent's fees for selling my house, nor any expenses for cosmetic redecoration, so I would save about £4000, as well as the 5-10% (£6000-12000)that I would probably lose by being made an offer below the asking price.
8. I would be able to buy a house without being involved in a chain myself, and thus might be able to get a more favourable price. Also, I would not have any delays in selling a house.
9. I could continue living in my current house until I was ready to move
10. I would not have to worry about remortgaging to give him his blood money if the settlement went against me. Thus, I would have no mortgage set-up fees, nor be faced with the higher rates that I would be offered given that I am self-employed and would probably need a self-cert arrangement.

Thoughts anyone?

Hi Terrified,

I can understand all your anxieties. Unfortunately I don't know anything about what you have outlined. However I did hear a piece on the radio last night about the number of complaints being made against these companies. Many people have been made homeless as after the deal has been done the companies inflate the rent costs after 6months and also fail to renew the agreement after this time. I would think long and hard before making any such decision and try not to be guided by your emotions towards your s2bx when making your decisions. I also think another poster said somewhere that there could be difficulties if a court felt that one of the parties had manouvered a situation so as to influence the outcome. I'm not sure about this though someone else will be able to correct me and be of more help to you

Pinkfish

Hi Pinkfish,

I'm trying to find a way to protect myself and keep my home rather than manipulating deviously. I'm in my 50s and the thought of starting all over again is unbearable. My pension fund will only supply me eventually with an income of about £7000 per year in today's money and that only if I continue contributing to it, and the forecast for the state pension is that I will only qualify for 87% of the basic amount. I did not start work until I was 35, because before that I was studying, abroad and bringing up two daughters. (Incidentally, I left my first marriage after 13 years without a penny, because all my cash went on winning child custody since the girls wanted to be with me and ex no. 1 contested this).

Currently, I work 90+ hours most weeks; fortunately nowdays I work at home as a fulltime freelance, but before I was in full time employment and then moonlighting at home most evenings. That is the only way I have managed to get a house and some capital. I see the capital as a financial cushion for any immediate disasters (I have fixed payments associated with my business as well as all the usual domestic costs that would need to be met even if I couldn't work for a time), and then ultimately as a means to let me cut down on work as I get older. With the pension I can expect, I will never be able to retire 100%, but it would be nice to look forward to working maybe only 30-40 hours per week. I am already finding it exhausting to start work about 10 am and work through until 2am, 3am, sometimes all through the night.

If my ex to be is awarded a large chunk of my house and capital, I will have to take out a mortgage to give him his share in order to keep my home. However, if I am suddenly saddled with large mortgage payments again (or rent if I lose the house), I will be unable to pay into my pension and the 90+ hr weeks will have to continue until I die or become senile. And as I said before, I fear about illness stopping me from working, because with a mortgage I would be under even greater threat. My ex to be, on the other hand, has pension payments assured, and with his wage could easily raise a mortgage if he wanted. He earns way more than me and works only normal hours, well actually somewhat less than normal, because every now and then he tells his boss that he will spend a day "working" from home, which consists of making a couple of phone calls and then doing nothing for the rest of the day. I feel it is so unjust that my "hard" assets of capital and house seem to be the only things going into the pot, when he clearly has a much brighter financial future than I do.

If the property is in your sole name, has your x2b registered matrimonial home rights against your property ?
This is the easiest, quickest way to prevent your spouse disposing of the property when it is in the sole name of that spouse.

Before even considering whether to sell and lease back, you need to be clear as to what type of tenancy is being offered. If it is an assured shorthold your rights are very limited, and your position therefore is very precarious. If the house is in poor repair, that will be reflected in the price you are offered.

Mike 100468