Firmer regulation needed over sale and rent back schemes
November 15, 2008
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 keep up with repayments on their homes. These schemes work by purchasing the property from the homeowner and then renting it back to them so that they do not have to move but can stop worrying about the mortgage, paying rent on the property instead.
However, a report from the Office of Fair Trading has suggested that for some people sale and rent back may not be the best option, and whilst the firms operating these schemes tend to offer an open ended tenancy to the former homeowner some have found that they are quickly evicted once the deal has gone through.
An official from the OFT said: “Our research shows that sale and rent back deals have potential to cause serious and permanent harm to often vulnerable homeowners. The unfamiliar and highly pressurised situations that these people find themselves in may leave them particularly vulnerable to misleading statements or valuations from sale and rent back firms looking to make a deal. Even those customers for whom sale and rent back might be the best option could be unaware they are currently bearing almost of all the risks.”
An official from the Citizen’s Advice Bureau said: “While sale and rent back agreements might be the right thing for some people, consumers need the sort of robust and binding safeguards that only statutory regulation is likely to provide.”
An official from the National Landlord’s Association said: “We believe the majority of sale and rent back landlords act with professionalism and integrity. A small number of rogue operators have now brought the entire market under close scrutiny.”
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