From today Paradigm members will be able to introduce clients to RPS who are facing financial difficulties or possible eviction and have exhausted every other option available to them. The ethical sale and rent back scheme provided by RPS gives homeowners the opportunity to sell their property and continuing living there as tenants.
RPS purchase the property at an agreed discounted price below market value and agree an affordable market rent to enable the client to remain as a tenant. Clients are able to purchase back their property from RPS at a future date, provided they have met all the terms of their rental agreement, and they may be able to share in any increase in market value.
Key features of the sale and rent back scheme include the ability to buy property for cash up to 75% of open market value, provide Assured Shorthold Tenancy (AST) agreements for periods from two to five years (Short Assured Tenancy agreement for Scotland), the ability for clients to buy back their property in the future and share in any increase in market value, and no upfront costs – all valuation and legal fees are paid by RPS.
The sale and rent back market is currently subject to an interim regulatory regime, with the FSA introducing full regulation with effect from June 30th this year.
John Coffield, head of Paradigm Mortgage Services, commented: “We are first to acknowledge that sale and rent back products will not be right for everyone, and should only be considered when all other avenues have been pursued. However, Paradigm members will have certain clients who are on the brink of eviction and have no other option available. In this situation, we believe the only option is to introduce them to a reputable and ethical sale and rent back company like RPS, to ensure complete transparency in accordance with the FSA’s regulation of the sector.
“We have therefore worked with RPS to ensure this option is available to members and their clients, and we know that by working with the market leaders, all parties will be benefiting from their wealth of experience to ensure fair treatment at all times. Full regulation of the sector is only a few months away, however RPS already operate in a regulated environment and this is why we believe advisers should have no hesitation in providing this option to those clients most in need.”
