Are Sale and Rent backs similar to equity release?

Are Sale And Rent Backs Similar To Equity Release?

Sale & rent backs are similar in nature to home reversion schemes, however initially they came without the protection afforded by the Financial Conduct Authority and have no codes of conduct as laid down by the Equity Release Council. In essence they work by the homeowner selling their property at a discount and then continue living there for a fixed term whilst paying a rent. However, this rent is not guaranteed & can be amended in the future. Also, whereas home reversions offer a lifetime tenancy, sale and rent back schemes do not offer such guarantees.

The concerns with sale and rent backs is that you no longer own your home, which is the same as any home reversion scheme where 100% of the property is sold. However, after the fixed term agreement has expired the rent can go up, or worse still you could be asked to leave the property which cannot happen with home reversion plans. They should be only considered as a last resort and should always be discussed with a financial adviser before pursuing such a extreme course of action.