Drawbacks

In most cases, the concept of sale and rent back works out more expensive for homeowners as the amount they receive for their home is less than what it is actually worth and the monthly rent is often more expensive than the mortgage they had in the first place.

Homeowners need to ask themselves whether they would be able to afford the rental payments (equivalent of the new owner's mortgage) despite the fact that they were unable to pay the mortgage on their property in the first place.

There is also the risk of the new owner of the property defaulting on the mortgage and the house being repossessed again, resulting in tenants (former homeowners) losing their homes anyway.

Furthermore, the quality of service from sale and rent back firms can differ widely. Some more established operators look to protect their reputations, but others may simply be looking to take advantage of others’ misfortune and gain a quick profit. The majority of the sector is unregulated, meaning most services offer no security in terms of long-term tenancy or rent levels. In some cases, landlords have been known to raise the rent substantially and quickly evict those who struggle to pay.