Sale and rent back need firmer regulation

Officials from the Office of Fair Trading have been calling for firmer regulation when it comes to sale and rent back schemes, which have been increasingly in the limelight over the past year or two, since the crisis in the housing and the mortgage markets began. The OFT claims that the problems relating to sale and rent back schemes leave many vulnerable people at risk.

Amongst the problems that have been linked to sale and rent back schemes are the fact that many homeowners receive way below the market value of the home and are forced to take the low sum out of sheer desperation, and some are told that they can stay on in the property as a tenant only to find that they are quickly evicted.

An official from the OFT stated: “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.”

He went on to state: “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.” The Council of Mortgage Lenders 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.”