Quick House Sale, Rent Back To Release Equity In Your Home

Homes across the UK have appreciated in value significantly over the last decade, even compared to general upwards trends of house price inflation.

For those looking to step on to that elusive first rung, this environment has made it harder than ever before to get started. However, for those that managed to get on earlier, it has provided a climate whereby substantial equity can be released in order to fund high yield investments or enable business start ups.

Traditionally, the only way to release equity in a property was to sell it and move on. Naturally this is sometimes seen as the least attractive option, and for those looking to move elsewhere it's likely to have very little financial impact unless the next home is in a lower house price area or is smaller in size. Add to that the hassle of moving and the stress of finding somewhere else to live, in the right area with the right schools and infrastructure, and you've got one big headache for everyone concerned.

However in recent years a market has grown for what is known as "sell house rent back", a process which allows homeowners to release equity without foregoing their residence. In a nutshell, sell house rent back is exactly what it says on the tin. Homeowners sell their house to an investor on the basis that they will remain in residence as tenants. From the homeowner's point of view this means they will be able to benefit from a lump sum cash payment without having to find somewhere else to live, or indeed without having to fund a new house purchase.

Retired homeowners have been particularly drawn to the sell house rent model as a form of pension. By offloading their house in exchange for a long term tenancy agreement, they can benefit from a substantial payment to fund their living costs, which will almost certainly be quite significant if they've held their property for any length of time. For retired homeowners this extra capital is far more beneficial than property ownership, and the promise of a long rolling tenancy agreement if they choose it often makes the deal too good to refuse.

From the investor's perspective, it's buy to let with a guaranteed tenant. The investor acquires an asset which provides an immediate return by way of rent, whilst it continues to appreciate in value. This can provide an opportunity for an extra income beyond any outstanding loan on the property, and is a business model that can be easily replicated on a larger scale to provide long term stability.

For both parties involved, a sell house rent back transaction can prove to be lucrative and indeed prudent, particularly amongst the current house price climate. Whilst no one can predict the future of house prices, records would suggest they are likely to continue to rise overall, making for a very stable investment for the prospective sell house rent back buyer, as well as providing equity release for those that require it most.

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