Welcome To SingingPig.co.uk

Hi Simon.

GetAnOffer:

Let me get this straight. 

I pass you a SARB lead were the vendor has indicated that they are prepared to sell at 30% - 35% BMV and you'll pass me a cheque for £1000? 

Not exactly generous.  I'm sure other FSA operators will pay more generous fees.

As with any business opportunity, you are at liberty to check what our competitors will be offering, and to go with them instead.  But please be aware that we did not arrive at the £1,000 figure lightly.  With us you would become a "licensed" finder - giving you the ability to advertise an "Option to Rent Back" - which will help you attract more business generally, by giving you a wider service offering - making your business proposition stand out from others, and resultantly attract more non-SRB business for you too.

If you do find another FSA operator to supply leads to, be 100% sure that the relationship between you is set up in an FSA-compliant manner - otherwise there will be trouble for both parties.

The overhead costs of being FSA Regulated for SRB transactions are horrendous - hence the relatively low finder fee.  Indeed it is unlikely that a 30% BMV deal will be of interest to an SRB company once the costs of FSA Regulation kick in.  I am aware that one of our expected competitors is offering £500 to finders, does not offer finders an online realtime case tracking system as we do and, as yet, has not yet even realised that the relationship with finders needs to be defined and managed extremely carefully in order to be FSA compliant.

As a point of interest, we did not set out to attract finders - we were actually begged by several investors to offer this service because they did not like the thought of simply throwing away SRB enquiries after 1st July. 

I think you, Simon, know this, but for the benefit of others who may stumble across this post... after 1st July, if you are not either directly FSA Regulated yourself, or you do not have an appropriate "license" from an FSA Regulated company such as us, you will be prosecuted (and possibly imprisoned) if you are discovered to:-

• advertise an option to rent back, or;
• provide advice to an enquirer who asks about rent back (such as recommending that they would instead be better off selling with vacant possession).

Best wishes,
Alan

alano:

Hi Simon.

GetAnOffer:

Let me get this straight. 

I pass you a SARB lead were the vendor has indicated that they are prepared to sell at 30% - 35% BMV and you'll pass me a cheque for £1000? 

Not exactly generous.  I'm sure other FSA operators will pay more generous fees.

As with any business opportunity, you are at liberty to check what our competitors will be offering, and to go with them instead.  But please be aware that we did not arrive at the £1,000 figure lightly.  With us you would become a "licensed" finder - giving you the ability to advertise an "Option to Rent Back" - which will help you attract more business generally, by giving you a wider service offering - making your business proposition stand out from others, and resultantly attract more non-SRB business for you too.

If you do find another FSA operator to supply leads to, be 100% sure that the relationship between you is set up in an FSA-compliant manner - otherwise there will be trouble for both parties.

The overhead costs of being FSA Regulated for SRB transactions are horrendous - hence the relatively low finder fee.  Indeed it is unlikely that a 30% BMV deal will be of interest to an SRB company once the costs of FSA Regulation kick in.  I am aware that one of our expected competitors is offering £500 to finders, does not offer finders an online realtime case tracking system as we do and, as yet, has not yet even realised that the relationship with finders needs to be defined and managed extremely carefully in order to be FSA compliant.

As a point of interest, we did not set out to attract finders - we were actually begged by several investors to offer this service because they did not like the thought of simply throwing away SRB enquiries after 1st July. 

I think you, Simon, know this, but for the benefit of others who may stumble across this post... after 1st July, if you are not either directly FSA Regulated yourself, or you do not have an appropriate "license" from an FSA Regulated company such as us, you will be prosecuted (and possibly imprisoned) if you are discovered to:-

• advertise an option to rent back, or;
• provide advice to an enquirer who asks about rent back (such as recommending that they would instead be better off selling with vacant possession).

Best wishes,
Alan

Hi Alan

I'm certianly not here to have a go but I feel you are being somewhat misleading.

As an experienced BMV'er / SARB operator who has investigated FSA legislation of the sector, I must stress that it will not be"horrendously expensive" to comply.  In fact, quite the contrary. 

Fees P.A will be around £3000 and according to Kevin Keagan of the Rent Back Charter Association, costs relating to compliance can be outsourced to the tune of around £600 per month. 

So, total fees / compliance costs, will run at approx £10,000 - £12,000 P.A - Not what I would call particularly expensive? 

Lets be honest.  Conducting Rent Backs in an ethical manner that comply with the FSA is not rocket science.  Sure, additional paper work will have to be done but as this can be outsourced cost effectively, whats the problem?

The biggest hurdle will be proving forward lines of finance.  If an operator is not reliant on buy to let products then there's really nothing to fear from the legislation. 

Sure, it wont be for everyone, but insinuating its horrendously expensive and rhetoric about how difficult it is to comply smells of "closed shop" and "cartel."

Hi Simon.

Thanks for the chance for a friendly open debate.  I certainly don't wish to mislead anyone.

I can only relay my own experience in preparing our business plan and application pack for FSA SRB regulation. And I can assure you - on my honour - that I have no wish for a closed shop or cartel.  I am extremely keen for as many SRB operators to be trading after 1st July as possible - as there is a signifcant need for such a service - and my primary "goal" is to help these people.  Those of you on the forum who know me well will already know that I tend to help people to my own detriment (my Finance Director has to keep reminding me of this - god bless the bean counters!).

Don't forget, by the way, the liquid cash reserve that will be required by the FSA.  The amount hasn't been defined yet for the Interim Regime due to go live on 1st July, but the FSA has already said that it will be at least £100k from Q2 2010.

I believe you may possibly have underestimated the amount of effort that is required in order to prepare for and maintain FSA status. We're not talking about the FSA classification that mortgage brokers fall into (which is tough enough).  As the FSA presenters at the London briefing said themselves - we're taking about a similar class of FSA regulation to that which is used for banks... ultimate accountability and culpability.

I am led to believe by those in the know (including the FSA approved compliance consultant we're employing) that the FSA will be "finding reasons" not to approve one-man bands, and those without significant infrastructure, significant senior corporate management experience, plus substantial human and financial resources (all of which are very expensive).

We're taking no chances - we're going in "big", to best ensure we gain approval.  This is expensive.   You also have to remember that, from Q2 2010 when the FSA rules are beefed up, it will be even harder to become/remain FSA approved.

Like you with me, I am not trying to have a go.  I truly hope that more than the expected 7 SRB companies are able to gain FSA approval.

Best regards,
Alan

Hi Alan thanks for the reply. I will register tomorrow morning.

So as long as i complete before 1st of July and state that the condition of sale is a quick purchase with a 12 month STA then after 1 year the property would be outside the control of the FSA ?

All very confusing. Ive only ever done 2 rent backs before and to be honest it was straight forward. No contracts just a STA which i re do each year. Both Deals were done 7 years ago and they still live there happy ever after.

Alan is there anyway i can contact you ? I could do with a little bit of advise ?

Hi again MIQ.

MIQ:

...So as long as i complete before 1st of July and state that the condition of sale is a quick purchase with a 12 month STA then after 1 year the property would be outside the control of the FSA ?...

Yes, I think you've understood correctly.  To explain from a different angle in case it helps...

In order to steer clear of FSA regulation with an SRB agreement made before 1st July, the SRB agreement between yourself and your customer must be fully terminated.   This can be achieved in several ways:

1. Your agreement with the tenant expires.  You should make it extremely clear within your negotations and contract (not just by virtue of the term of the AST) that they will not be entitled to occupy the property after the agreed period of time (e.g. one year).  You can then optionally agree to a totally new agreement with the person - making it clear that the new tenancy is in no way related to any previous agreement (this has yet to be ratified by FSA - and could yet be over-turned).
2. The tenant decides to leave of their own accord.  This might, for example, be because they get relocated by their employer.
3. You evict the tenant because they have breached the terms of the AST
4. You simply kick the tenant out.  Strictly speaking, because you'll be buying before the FSA regime comes into force, you could simply decide to kick the tenant out because you "feel like it".  The OFT will (and already do) take a very dim view of this - and this is one of the two key reasons for the FSA being mandated to regulate the SRB industry.  You could suffer prosecution by OFT (not FSA) by breaching your "agreement" with customer.

MIQ:

...Alan is there anyway i can contact you ? I could do with a little bit of advise ?

By all means, MIQ, you (and anyone else who wishes) can contact me by email (click on the Contact button at top right corner of this message) and I'll reply as soon as possible (usually same day).  However, I'm not taking phone calls because I need to be able to concentrate on this wretched FSA application - it's draining me!

Best regards,
Alan