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June 01, 2011

Comments

Observer

Was the labour plan so bad, whereby people could buy 'insurance' for say £8k to cover their possible transfer to a care home? I recall this being rubbished by Dave & co before the election but they haven't come up with anything better.

Victor Southern

Observer - it was not a Labour plan but an idea advanced by George Osborne, when Shadow Chancellor, on October 3rd 2009.

So, your recollection is 100% wrong.

John Wood

The cause of the collapse is symptomatic of the buy-to-let boom.

In effect Southern Cross owned (Yes OWNED) a lot of property so they decided to sell and rent back the property they owned and use the money to expand i.e. buy more properties and then sell and rent them back as well.

They thus went from a company with high levels of assets, ow debts and low liquidity to one with no assets and requiring income every quarter to pay the rent.

Whilst the cost of caring was expensive this plan worked. Now they are being squeezed their income isn't covering the rent.

The same happened to Woolworths (it was asset stripped) and when the recession came it, too, folded.

The info taken below from http://www.sellandrentbackltd.co.uk/sell-and-rent-back/Article2540.aspx

Southern Cross sell and rent back care homes
Another company, Southern Cross, the biggest owner of care homes in Britain, was able to expand rapidly in 2007 thanks to its sale-and-rent-back policy. It bought a number of care homes, including 15 in one deal for £96.5 million. Southern Cross doesn't actually need to pay out that much money, though – it buys a care home, sells the property to a real-estate company, and rents it back. Like BT, it can therefore run its business – in its case, caring for the elderly – and only has to pay a rent on its properties, rather than a hefty mortgage plus building maintenance and repair costs.

Other companies have been able to cash in on rising property prices and one man in particular has a successful record of making profits for companies with a sell-and-rent-back policy.

TomTom

Southern Cross is 56% owned by BANKS http://investors.schealthcare.co.uk/majorshareholders.aspx including Lloyds Banking Group but the biggest shareholder is Credit Suisse followed by J O Hambro Capital. It is a wonderful feeling as a taxpayer to bail out banks repeatedly. They rented the property, that was their business model, but of course if they cannot afford the rent the taxpayer should step in....that is Corporate Socialism. NO Bank should ever suffer any loss so long as taxpayers have the ability to pay and taxes should be so low that Banks holding nursing home shares presumably through Jersey should not have to pay any taxes.

We live to serve the Banks

Holly

No political party would allow this to happen...
ONE particular party,however never looked beyond the latest headline grabbing quick fix,and this is the result.
Labour NEVER ran the country,they ran the headlines.
Nothing is working as it should and it will be a very long time until things are fixed PROPERLY!
Do the British public have the patience?

ToMTom

OK Holly, just what should a political party have done when private companies bought care homes and sold off the real estate and leased it back ? Is that why you oppose M&S doing the same thing or Boots ? Do you have an objection to private companies buying care homes ? Or is it just another stick to beat Labour with in a childish politico rant ? Obviously it should go bust and The High Court should remove Limited Liability Protection from the Banks which own it so they are FULLY LIABLE

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