Diary of a UK Property Investor – SARB are investors are still able to buy?

Diary of a UK Property Investor – www.hbfinvestments.co.uk

Property investors must by now be aware that the interim regulations for Sale and Rent Back come into force on 1st July.  These regulations effectively prevent property investors buying SARB investment properties unless they are applying to become fully regulated.

Very few companies will be able to achieve regulation due to the application and set up costs and more importantly the financial clout required.  Of the three companies I know who are applying for regulation; all have access to funding that is not reliant on mortgages from UK lenders.  This is a key requirement as most lenders refuse to offer mortgages to property investors who are buying investment properties and renting them back to the current homeowner.  Other sources of funding are simply out of reach to the majority so it will be a very limited number of companies who are able to offer SARB services and this lack of choice may not offer the best deals for homeowners.

HOWEVER, it appears that if investors do not own a SARB property then they may be able to purchase ONE ‘sale and rent back’ property without needing to be regulated.  This is in ‘black and white’ in the FSA guidelines but we are seeking legal clarification on this. 

If this proves to be the case it would be a welcome option for many vendors as most of the regulated companies are limiting the price they will pay for a SARB property to 65% of the property value.  Many individual investors [for example family and friends] may be able to afford to pay far more than this.

I would welcome homeowners having the choice between selling to a fully regulated company paying just 65% and getting the most cash for their property.  Nobody would question homeowners having the option to obtain the best price they can when selling their properties, even if they are renting them back.  This would especially be appropriate in examples when homeowners may only wish to rent back their property for a short time; for example, when they want the house sold and their cash in the bank but have the benefit of remaining settled in their home for a year until their move abroad is finalised!

Maybe this exemption for property investors buying just one SARB investment property will allow homeowners this appropriate choice?  I will keep investors posted of developments.

Source: David Coughlin HBF Investments