Sell your home and rent it back

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Selling and renting back is becoming more well-known and increasingly common. After the sale, you continue to live in your home, so there's no need to move. In most cases, this arrangement is done to access the equity in your home. Nowadays, there are various reasons why selling and renting back your home can be an attractive option in the Netherlands. In this article, you'll learn what selling and renting back entails and how it works.

How does selling and renting back work?

With selling and renting back, the home is sold to a party that immediately rents it back to the previous owner. This means that the target audience is different from when you sell a vacant property. You cannot use a regular real estate agent for selling and renting back. HuisHunters, for instance, can help you in such a situation. The sale process is almost the same as a regular sale, but in addition to a purchase agreement, a rental contract is also drawn up. The sale price will be around 70% of the market value. After finding a buyer, the purchase agreement and rental contract are drafted. The home is rented to the previous owner after the notary's transfer, and any equity will be deposited into the seller's account.

Why would you sell and rent back your home?

There are different situations in which selling and renting back can be a viable solution. Whether it's right for you depends on your desires and future plans. Selling and renting back might be a solution if you:

  • Want to access the equity
    It's very likely that you have equity in your home. Selling and renting back allows you to access this equity. You can use the funds for various purposes.

  • Are retiring
    Many people who are approaching retirement want to release the equity from their homes to enjoy their retirement. In some cases, this can even allow people to retire earlier.

  • Are emigrating
    If you're planning to emigrate, it might be practical to sell and rent back your home, giving you the financial flexibility to search for a suitable property in another country.

  • Are getting divorced
    In most cases, during a divorce, the home needs to be sold. With selling and renting back, one of the parties can continue living in the home. This is a favorable solution if you don't want to move, especially if you have children.

  • Expect house prices to drop
    You could leverage this option to take advantage of a possible decrease in house prices. You can sell your home in a good market and then buy a new home when prices have fallen. During this time, you can rent back your old house for a specific period.

What Are the Advantages of Selling and Renting Back Your Home?

Several things change when you decide to sell and rent back your home. You transition from being an owner to a tenant, and this comes with some advantages. The primary benefits for the seller are:

- Access to the equity;
- Continuing to live in the same house after selling;
- No more maintenance costs;
- Required insurances are paid by landlord;
- No property taxes;
- No loss if property prices decrease.

However, not being the owner comes with some drawbacks. You are not allowed to make changes to the house without permission, and you won't benefit from property price increases. On the other hand, you won't incur losses if property prices decline. Rental costs are generally higher than mortgage payments.

How is the rent determined?

The rent is determined based on the mortgage interest rate and the sale price. Companies that facilitate selling and renting back typically have a calculation for determining the rent. They usually require a return of 7% - 10% per year. For instance, with a sale price of €250,000, the rent could be calculated as follows:

€250,000 x 7% = €17,500 annually / 12 months = €1,458 per month
€250,000 x 10% = €25,000 annually / 12 months = €2,083 per month

The rent price is almost always exclusive of gas, water, and electricity. The calculation shows that a higher sale price results in a higher rent, and vice versa.

Step-by-step guide

Selling and renting back follows a process quite similar to a regular sale. With HuisHunters, the process consists of five simple steps:

  1. Sign up the property
    You can list your property at no cost, and we will conduct preliminary research on the property and its potential value.
  2. Quick response
    In preliminary discussions, we will go over the possible sale price and associated rent.
  3. Property listing
    Once the sale price and rent are determined, we will list the property within our network.
  4. Property viewings
    You will handle property viewings yourself. This is the point at which potential buyers can view the property in person.
  5. Purchase agreement and rental contract
    After reaching an agreement, a purchase agreement and rental contract will be prepared, outlining all legal agreements.

Selling and renting back is becoming more popular, offering opportunities that are unavailable with a regular sale. The primary reasons for this option are to access equity, retire, emigrate, or speculate on a decrease in house prices. There are several benefits to selling and renting back, such as transferring the burden of maintenance costs, required insurances, and property tax to the landlord. Additionally, the equity is released, and you don't suffer a loss if house prices decline.

We're here to help! Feel free to list your property without any obligation or cost, and we'll get in touch with you.