Tenants are being offered up to £12,000 to sell their council homes to a private company in a scheme which could leave residents homeless.

Property companies are exploiting a loophole in the council's right-to-buy scheme which enables them to buy properties in tenants' names, earning the discount and selling them off at a profit.

Although residents are offered large cash incentives, part of the deal is that they leave their homes which are then rented out for higher amounts and sold off after three years at the market value, with no further gain to residents after the initial bonus.

Those who take up the offer have to rent or buy in the more expensive private market and find they are no longer eligible for a council house after selling their original home.

A number of companies have been targeting tenants in London but, as property prices have soared in Brighton and Hove, companies have begun searching in lucrative sites in the city.

In the last few months, residents in Moulsecoomb, Whitehawk and Portslade have been receiving letters from such companies offering them the cash deals.

One advert says: "You can benefit from exercising your right to buy. Realise some cash now for that dream house, business start-up, car purchase or debt clearance."

The advert even asks: "Will you vacate your property for a cash sum?"

The companies are using the scheme to earn the generous discounts tenants receive when they buy their homes from their local authority.

A council tenant who has lived in their property has the right to buy it after two years. The longer the tenant has lived in the property, the bigger the discount when they buy. The maximum discount is £38,000.

If a house in Whitehawk was valued at £138,000 and the tenant had lived in it for long enough, they could qualify to buy the house for £100,000. These companies offer to buy the home, receiving the discount, and offer the tenant between £10,000 and £12,000 to leave the property as part of the sale agreement.

Residents who have taken up the offer in some London boroughs have been going back to the council, saying they are homeless once they realise the cash is worth little.

Dave Barnard, chairman of the Moulsecoomb East Social Activities and Tenants Association, became aware tenants in the city were being targeted as possible sellers.

He said: "It's preying on the most vulnerable. To some council tenants the thought of a few thousand quid in their pocket is a dream but it doesn't go far."

The Government and some local authorities whose tenants have been targeted are looking at ways of stopping these firms.

Some councils have considered blocking sales with legal restrictions on sale agreements but no precedent has been set.