Selling and renting back

Schemes allowing you to sell and rent back your home

Owner-occupiers have been approached by companies offering to buy their homes, and then rent them back to them as tenants. These companies target people who have bought their homes from us, people who are in financial difficulties, older people and those who want a quick sale.

There are often important details that some companies do not make clear in their advertising. You should get advice and look at all of your other options before considering a sale and rent back scheme.

You should also carefully consider the following information.

If you sell your home and rent it back, and can't afford the rent then you won’t be able to claim Housing Benefit if you:

  • rent the home that you used to own, and
  • claim Housing Benefit within five years of selling that home. This is known as the former owner rule. This rule doesn’t apply if you can show us that you couldn’t have continued to live in your home without selling it. The former owner rule does not apply after five years.

There are also other factors that we will have to consider before deciding if you can receive Housing Benefit.

You must give us the reasons for selling your home and provide evidence of the situation that led to the sale.

This evidence may be:

  • letters from your mortgage lender about action they would take to collect any debts

  • proof of your income and outgoings at the time you decided to sell

  • evidence of other factors involved in your decision to sell

You don’t need to prove that keeping your house was impossible. You do need to show us that your circumstances forced you to sell.

We will decide if we agree that you had no other choice in order to stay in your home. We will make this decision based on the facts of your case and the evidence that you give us.

If you sell your house when you had other reasonable choices (see below), then you won’t be able to claim Housing Benefit.

To decide whether you qualify for Housing Benefit we will consider the following factors:

  • whether you could have claimed benefits to help with your ownership costs, such as Income Support, Jobseeker’s Allowance, Employment and Support Allowance or State Pension Credit

  • whether you had debts that were secured on your home

  • whether these debts were likely to lead to your mortgage lender taking back your home

  • other assets you could have sold

We may decide that you could have stayed in your home without selling it. We will then refuse your Housing Benefit claim. For example, if you sold your home to:

  • repay unsecured loans, such as credit cards or hire-purchase agreements
  • reduce your monthly outgoings so that you could follow an interest like being a student or setting up a new business

If you decide to sell your home then its value may affect your claim for Housing Benefit. This may apply even if you’re claiming for renting another property.

How we deal with this depends on the amount of capital that you have after selling your home. Capital is your money and assets, such as:

  • money in your bank or building society account
  • Premium Bonds
  • National Savings Certificates
  • stocks and shares
  • property

We may reduce Housing Benefit or not pay it at all, depending on how much capital you have. The value of most types of capital iscounted when deciding Housing Benefit, but some types of capital aren’t counted.

Even if you give away some or all of your capital, we may still count this when deciding your Housing Benefit.

We may decide that the value of your home should be counted as capital. This will affect your claim for Housing Benefit. We will look at the facts of your case and why you are selling your home when we make our decision.

We may decide that you sold your home in order to claim Housing Benefit. We will then count the value of your home as capital.

We will decide whether you sold your home to get Housing Benefit based on:

  • your knowledge of the Housing Benefit rules
  • why you sold your home
  • when you sold your home
  • why you claimed Housing Benefit
  • when you claimed Housing Benefit

If it was reasonable for you to sell your home - we will consider all of the circumstances and evidence that you provide when making this decision.

If you keep capital from the sale of your home then this may be included in your assessment for state benefits. This may affect you if you claim:

  • Employment and Support Allowance
  • Income Support
  • Jobseekers Allowance
  • Pension Credit
  • Housing Benefit

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