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Leaseholders - information and advice

Owner – Occupiers Leaseback Scheme

These are schemes where private companies offer to buy properties at a reduced market value and then allow the former owners to remain in the property as tenants. Such schemes can seem attractive providing a cash lump sum and at the same time the opportunity to remain in the family home.

There are however a number of issues owners need to be aware of if they are considering entering into this type of agreement.

What type of tenancy am I being offered?

The standard type of tenancy in the private rented sector is the Assured Shorthold Tenancy. These can be let on a week to week or month to month basis or can be for a fixed period of time.

It is relatively easy for a landlord to gain possession of this type of tenancy especially if there is no fixed term or the fixed term has ended. In these circumstances (after the first six months) the landlord can obtain possession by giving two calendar months notice in writing and obtaining a court order. They do not have to have grounds for possession.

What level of rent will I pay?

Under an Assured Shorthold Tenancy the level of rent is whatever is agreed between the Landlord and Tenant.

If you are offered a fixed term tenancy you will need to check whether there is a clause in the agreement that allows the landlord to increase the rent every year and by how much.

Will Housing Benefit pay my rent?

You may not be entitled to Housing Benefit where you or your partner previously owned the accommodation. This restriction applies for a period of five years. After this time you would need to satisfy the usual rules for claiming Housing Benefit.

If I receive a capital lump sum will this affect my benefits?

If you are in receipt of means tested benefits like Income Support, Tax Credits and Council Tax Benefit then any capital sum that you receive may affect your benefits.

If your total capital (including any sum you get for your house) is over £16000 you will not qualify for Income Support or means tested Job Seekers Allowance.

Any capital sum between £3000 and £16000 can lead to a reduction in your Income Support , Council Tax Benefit and Tax Credits.

If you are over 60 you there are no capital limits but any capital over £6000 can lead to a reduction in your Pension Credit.

The above highlights some of the general points owners thinking about this option should consider. Individual circumstances are going to be different in each case. For further information and advice concerning any of the above please contact our Advice Service.

It is important that any person thinking about entering into this type of agreement should also seek independent legal advice regarding the sale and any contract they are entering into.

Age Concern also hold details of established schemes to enable home owners to release the cash value of their properties. For further information contact 0800 00 99 66.