Sale and rent back schemes to be looked at by OFT

With the current level of repossessions facing homeowners in the UK the popularity of sale and rent back schemes has been rising, with more and more people looking into these schemes rather than facing the prospect of losing their homes through repossession. However, there has been some controversy over the fairness of these schemes, which has prompted an investigation by the Office of Fair Trading.

Sale and rent back companies basically purchase the home from the homeowner, and then rent it back to them for a long term or indefinite period, which means that the former homeowner can stay on in the property but does not have worry about repossession.

However, some officials are concerned that some sale and rent back companies are paying way below market value for the properties and are then going back on promises over how long the former homeowner can rent the property for.

An official from the housing charity Shelter recently stated: ‘These companies encourage hard-up homeowners to sign up for what is plainly a very bad deal. Shelter has seen cases where homeowners have not only lost out financially after selling their homes to an sale and leaseback company, but also lack any right to permanently stay in their home and ultimately find themselves homeless. Shelter has called on the Government for regulation in this growing sector, and we hope the OFT study will offer the public improved protection against the hidden dangers of some schemes and ensure all sale and leaseback companies operate in best interests of consumers.’