Another cut price vanilla slice Sir ?

Thousands of landlords are now attempting to break into the sale-and-rent-back (SARB) market as a growing number of people face repossession.

This market is effectively like going into your favourite bakers at five minutes before closing and offering them 70p for their last vanilla slice, priced up at £1.00, which otherwise would go to waste. Except on a much grander scale !

Some would say these landlords are preying on the weak, taking advantage of others misfortune. Others saying they offer a lifeline to the struggling homeowner. There also seems to be a morality issue here, I personally don't think I will be venturing into this new market phenomenon.

Sale-and-rent-back agreements allow homeowners to sell their property at a discount price to a landlord. (Typically the homeowner will receive 75-80% of the property value) who will then rent it back to them at the market rate.

Despite the fact that they will sell their home for tens of thousands less than it is worth, the advantages of sale-and-rent-back may seem attractive to borrower in arrears, especially as deals are advertised on the basis that they can be conducted swiftly and quietly with no need to tell neighbours or even family.

Keeping up appearances and the image of a perfect life is one of the main issue to homeowners here. In many cases the alternative would be repossession.

Would you sell your home for £50,000 less than it's worth? This is what sale-and-rent-back companies would be asking the owner of a £200,000 property to do if they purchased it at 75% of its value.

If you have to sell up and move then accept that fact. If you need a quick sale due to debt problems, speak first to your mortgage lender. It may be able to find a cheaper deal, switch you to an interest-only loan, or delay repayments to give you time to sell.

It is then possible to put the home on the open market at a low asking price and try and get the best offer possible. If you have to move to a different property, so be it. Mortgage lenders do not want to repossess homes, it is a complicated and expensive process for them and they are unlikely to get back a property's true value.

Weigh up all your options first and seek good advice before making a judgement call.

Lets hope this trend doesn't head as far North as Moray !

Let's be careful out there.

Mr Jackson.