Watchdog to probe sale and rent back
The UK’s watchdog, the Office of Fair Trading, recently announced that it would be launching an investigation into sale and rent back scheme, which have been gaining popularity over recent months due to the rising levels of people facing repossession due to high mortgage arrears. Whilst the sale and rent back industry has claimed that this is an ideal solution for many struggling homeowners, many campaigners have expressed concern over how fairly sale and rent back customers are treated.
Over recent months an increasing number of homeowners have been struggling to keep up with repayments, due to high borrowing costs, lack of availability and access to affordable refinancing, and increased living costs. This has seen an increase in the level of repossession orders, which could lead to soaring numbers of people losing their homes. This is why many people have turned to sale and rent back schemes, where a sale and rent back firm buys the property from the homeowners and then grants the former homeowner a tenancy in the home.
However, some officials have expressed concern that the homeowners are not being fairly treated because they are not receiving a fair price for the home, and often promises over the length of the tenancy granted are broken. With regards to the OFT probe into sale and rent back an official from the homeless charity Shelter said: ‘This study is urgently needed, and comes on the back of vulnerable people losing their homes to some dishonest sale and leaseback companies.’
He went on to state: ‘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.’
Recent Additions:
- No change to mortgage crisis
- Gas bills could rise by £400 a year
- Competition Commission plans to look into PPI
- Get a good deal on your savings from a British bank
- Insurance firms could face huge losses
- Unemployment levels could rise due to housing slump
The Financial Services Authority announced that as of July 2009 this sector will be brought under partial regulation, with full regulation coming some time in 2010. In my opinion this is well overdue as the lack of regulation has allowed unscrupulous operators to take advantage of vulnerable home owners unchecked for years.