Are you looking for an alternative to Reposession?  Sell and rent back schemes are one one option, but you need to know how to avoid the pitfalls.

Both the Housing Executive and Citizens Advice Bureau have been contacted by concerned owner-occupiers who have been approached by companies offering to buy their homes and allowing them to stay on in the properties as tenants and pay rent to them.

It appears that the companies are targeting people who have bought their homes from the Housing Executive, people who are in financial difficulties, older people and those who want a quick sale.

While these schemes may be appropriate in some circumstances and may appear to provide a simple answer to financial problems, there are a number of things homeowners should be aware of before entering into such arrangements and it seems that some of the companies involved don't make this clear in their advertising literature.

Housing Benefit

If you were the previous owner of a property you are now renting, you will not be entitled to Housing Benefit for a period of 5 years after selling your home unless exceptional circumstances exist. You should therefore consider whether you can afford to pay the rent charge without any help through Housing Benefit.

Other State Benefits

Any capital you retain from the sale of your property may be included in your assessment for state benefits and may affect your entitlement to

• Income Support
• Job Seekers Allowance
• Pension Credit
• Housing Benefit

Even if you give away such capital in gifts these benefits may still be affected.

House Sales Discount Received

If you originally bought your home under the Housing Executive's house sales scheme, and you resell the property within 5 years of the date of your original purchase you will have to repay all the discount you received.

Rent Arrears

If you are unable to meet your rent charge and fall into rent arrears you may face debt recovery action or even eviction from your home.

This is not an exhaustive list of considerations and there may be other circumstances to be taken into account in particular cases.

The Housing Executive and Citizens Advice Bureau therefore strongly recommend that before entering into one of these sell and rent-back schemes, homeowners fully consider the implications of doing so and all possible options open to them especially if they are experiencing financial difficulties. They should seek advice from a range of organisations including:

• Their mortgage lender if they are experiencing difficulties paying their mortgage.
• Their local Housing Executive office will provide advice if they have any enquiries regarding potential Housing Benefit entitlement or repayment of discount.
• The Citizens Advice Bureau can arrange debt counselling if they are having difficulties managing their finances & will ensure that their rights are protected.
• Their local Jobs & Benefits office will answer any queries regarding help with mortgage payments or entitlement to state benefits.

Example of what happened in one case .... Names Changed

Mrs Graham, a NIHE tenant, purchased her property jointly with her son. Her son, who paid the mortgage then ran into financial difficulties and insisted on the sale of the dwelling.

His mother felt that she could not refuse permission for the sale as she could not pay the mortgage herself. She was advised that DHSS would disregard the capital for a period of 26 weeks if it was to be used to purchase another property.

The property was duly sold to an investor who allowed Mrs Graham to remain as a tenant. Mrs Graham advised DHSS that she had received £31,000 from the sale & stated that this was to be used to purchase another property. Mrs Graham's son also received £31,000. He no longer lived in the dwelling.

Mrs Graham therefore retained her entitlement to Income Support but was refused Housing Benefit as she had been an owner of the dwelling within the previous 5 years. Mrs Graham therefore had to pay the weekly rent herself or face eviction.