Consumers should be careful about sale and rent back companies

Consumers, and in particular pensioners, are being urged by campaigners and authorities to be extremely careful when it comes to sale and rent back companies, which focus on buying up properties from homeowners and then renting them back to the homeowner.

A number of sale and rent back companies have come into operation over recent years, targeting those that have assets worth substantial amounts of money but have little in the way of disposable cash.

The concern is over unregulated companies, which are often set up by buy to let landlords that want to buy property at below market price and then sell on at a profit. Often, these unregulated firms offer only a short guarantee of tenure to the homeowner after purchasing the property, after which the homeowner could well find himself or herself without a home and facing eviction so that the landlord can sell the property on and make a tidy profit.

If the firm is unregulated there is little in the way of protection for the consumer, and this is something that homeowners need to be very careful of, state experts.

One equity release specialist stated: ‘People should be aware they face losing their homes if they sign up to a sale-and-rent scheme.  There are safer alternatives. Bona fide regulated equity release plans offer retired homeowners the chance to release cash against their homes but have complete security of tenure.’

He added: ‘Sale-and-rent may seem attractive to those weighed down by debt and mortgage repayments, but with no regulator to oversee their activities; there is now a new type of landlord trying to take advantage of customers’ circumstances.’

Tom Smith
14th September 2007

Tags: rent, properties, careful, consumers, sale