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.