Sale and rent back described as ‘daylight robbery’
June 11, 2008
An official from the housing charity Shelter has described some sale and rent back schemes as conducting ‘daylight robbery’. Shelter, along with other campaigners and groups including the Citizen’s Advice Bureau have been pushing for the government to introduce regulations and measures to stamp out unfair practices by such companies, which it states is leaving the lives of some people in tatters when they lost their homes and are affected financially.
The Shelter official stated: ‘The actions of some companies offering ’sale-and-lease back’ schemes amounts to daylight robbery, leaving growing numbers of people financially ruined and homeless. The Government must urgently introduce regulation to stamp out this unscrupulous practice, which is cashing in on people’s financial problems and deepening their misery.’
In a recent episode of ‘Tonight’ with Trevor McDonald an official from the Citizen’s Advice Bureau said that these schemes were a ‘disaster waiting to happen’. Sale and rent back firms have been under criticism for some time now, having gained publicity in light of the increased threat of repossessions that has swept across the UK because of rising interest rates and turmoil in the financial markets.
Many sale and rent back firms are targeting those that face repossession, enabling them to eliminate the risk of repossession by selling the home and then letting them rent the property back. However, the concerns are that many consumers are only getting 60% of the value of the property when they sell, and once the first six or twelve month tenancy has ended there is no guarantee with regards to how long the former homeowner will be able to stay on.
Recent additions:
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- Mortgage lending still on the decrease
- Consumers could be hit by rising mortgage rates from lenders
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- DWP loses sensitive information There has recently been another blunder, with yet another government agency losing sensitive data about consumers. The Department for Work and Pensions has admitted that it has lost hundreds of budgeting loan application forms, each
- Firmer regulation needed over sale and rent back schemes According to industry officials firmer regulations is needed when it comes to sale and rent back schemes, which have seen take-up increase over the past year as an increasing number of homeowners have struggled to
- First time buyers - do they benefit more from buying over renting? A recent report has suggested that although house prices are falling, mortgages have become more expensive, and credit conditions are tighter than ever, many first time buyers could still be better off purchasing a property
- How are estate agents bearing up to the housing crisis? The housing slump in the UK has hit rock bottom over recent months and estate agents have been reporting very poor sales figures over this period. The housing crisis has been fuelled by one disaster
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The Office Of Fair Trading is about to launch (mid October) a report into the sale and rent back market. The study will reveal whether or not the UK government needs to intervene and regulate this market. The government announced last month they will be providing their own rent back scheme, giving local councils the power to buy properties from struggling home owners. However, limited funds have been assigned to this cause.