Sale-and-rent-back agreements allow homeowners to sell their property at a discount price to a company, which will then rent it back to them at 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

But there are major drawbacks to dealing with these unregulated firms, some of which may be looking to turn a quick profit from others' misfortune.

Here is what you need to know about the new trend:

Sale-and-rent-back companies purchase people's homes for less than the market value, typically 70% to 80%, generally paying all fees and costs, and then rent the property back to the original owners at market rent, or sometimes less than their mortgage payments if these were lower than the rental value.

Homeowners can use the cash to settle their existing mortgage and any outstanding debts, while remaining in their own home. Some companies offer the opportunity to buy the house back at market value at a later date.

Why would someone choose sale-and-rent-back?

Selling your home for tens of thousands of pounds less than it is worth is not an attractive prospect. But those fearing repossession due to mortgage arrears and facing large personal debts may see it as a simple way out of trouble.

Companies heavily promote their ability to complete in a week if necessary, their payment of legal fees and willingness to help customers sort out their debts.

Most sale-and-rent-back operators claim vendors may only get 85% of their property's value by selling on the open market and say they will pay between 70% and 90%, depending on a surveyor's valuation.

Firms that offer sale-and-rent-back also promote discretion, saying that neighbours need not know there has been any change in status, while families can stay in the same home and children can continue to attend the same school.