SELLING your house to release cash then renting it back might sound like a tempting offer – but the borough council is urging caution.
Increasing numbers of people struggling to pay their mortgage are turning to property companies which promise to buy their home and rent it back to them.
Many take up the offer believing they will be able to claim housing benefit to help pay the rent but in many cases they are not eligible.
The council’s benefits and taxation unit manager Bev Wright explained: “This might seem like the perfect solution, freeing up equity and clearing debts, while still allowing people to remain living in their own homes.
“But what many people don’t realise is they are only eligible for housing benefit if they can show that they wouldn’t have been able to carry on living in their home if they hadn’t sold it.
“Otherwise they will have to wait five years before being able to claim benefit. Also, if selling their house leaves them with savings of more than £16,000, they will not be able to claim.”
She added: “We have heard some heartbreaking tales from people desperate to get out of debt who have sold their homes believing they will be eligible for housing benefit when they rent their property back.
“I would urge people to come to us for advice or talk to the Citizens Advice Bureau before making any decision relating to their homes.”
The council’s housing benefits team can be contacted on 0151 356 6836.