New Sell and Rent Back Profit Scheme
The NHA have introduced the ultimate sell and rent back offering which enables you to protect your home, raise cash now and continue to have an investment in your property for the future.
Usually, the biggest drawback of entering any sell and rent back agreement is the simple fact that you lose your rung on the property ladder and can expect to find it extremely difficult to climb back on in the future. In addition, the highest purchase price you could expect to be offered is about 80% of the propertys value - in todays financial climate, this can be as low as 60-70% due to the rapidly declining property market and nervous analysts predicting falls of over 30 percent over the next few years.
It is these drawbacks that the NHA have addressed in launching its new profit share scheme.
It is true that house prices have started to decline recently, however this is simply in line with the recent 'credit crunch' - the fact is that there has never been a ten year period in which house prices didn't go up. As shown in the graph below - over the last 30 years, house prices have, on average, doubled every ten years!
The NHA recognises that people who are considering selling and renting back still want to keep a long-term investment in their property and long-term security but don't want the stress of paying high mortgage / interest payments or the threat of a losing their equity in a looming short-term property crash.
The new profit scheme offered by the NHA allows people to do this and gives them the opportunity to pay off all their debts very quickly and have a huge payout in ten years time, once house prices are back on the increase.
Sell and Rent Back Profit Scheme - Details
For information on basic step by step process:How the Sell and Rent back Process Works
1. On valuing your property by an independent (RICS) surveyor, the NHA will tailor an offer to suit your needs. All offers however, will include a large initial cash payment AND a percentage profit share in the property as an investment for the future.
2. If you need to receive a high initial payment in order to pay off debts for example, the NHA will offer you the highest possible purchase price based on current lending limits. You will also receive a 30% percentage share in future profit in the property.
If on the other hand, you do not need to release that much equity - the NHA will give you a smaller cash payment (purchase price) but a much higher percentage in profit share - even exceeding 50%.
3. The NHA recommend that the profit share pay out should be made in ten years, allowing for any house price crash to totally recover. Therefore, to obtain the % profit share, you must be prepared to stay in your property for several years. You can request the % payment at any time after 5 years however, if the climate is not right, the NHA will not be obliged to release the profit for a further 5 years (ten years in total). It can also be negotiated that the profit be left in the property beyond the ten year period, allowing it to grow even further
4. Once you have chosen to release your profit share, you can choose to do one of three things:
a) Buy the property back from the NHA at current market value. Using your % payment as all or part of your deposit, you can buy your home back and gain full ownership of it once again.
v b) Remain as a tenant for as long as you wish You can certainly stay in the property as a long-term tenant however, the NHA will need to sell your property in order to release your % of profit. Therefore, the NHA will sell your property to another reputable 'sell and rent back' company/ individual who will be legally bound to offer you a life-long tenancy.
c) Vacate the property
5. Any costs that the NHA incurred during that 10 year period in managing and repairing the property will have to be taken into account prior to profit share being paid. Therefore, if you maintain the property to a high standard, you will receive a higher payment at the end of the ten year period.
6. The profit scheme is available to everyone so long as there is at least 30% of equity in the property.
