A new breed of landlord has appeared in the last few years.  They will buy your home from you but you can stay in it as a tenant.  If you are struggling to pay a mortgage it is tempting to see this arrangement as the answer to all your problems because your mortgage debt disappears but you stay in the house of your choice.

As with all financial transactions there are pitfalls and good advice is essential.  Will you receive a fair price and how long will you be allowed to stay under the new lease?  The purchaser is unlikely to offer as much as the house might be worth on the open market and the lease might not give very much security.

The Financial Services Authority is issuing some new rules to protect people thinking of selling and renting back.  The new rules apply from June 2010 and include:

A 14 day cooling off period

The new landlord must offer at least a five-year lease

The arrangement must be affordable and appropriate for the consumer.

See the FSA website for more information : www.fsa.gov.uk

Incidentally, the landlord and tenant will need to ensure that they have appropriate insurance cover in place.  Does anyone have experience of this type of arrangement?

Click4quote offer landlord insurance online. Our can protect the property when rented unlike most standard homeowner insurance which excludes this situation meaning the cover is invalid.