Checklist Introduced For Sale And Rent Back Schemes
You may have read on a number of occasions over the past few months a little into the ongoing saga that is sale and rent back schemes.
These are schemes whereby a home owner who may be struggling with the repayments on their mortgage or homeowner loan is able to sell the property to a company who will then rent it back to them, allowing the person to remain in their home.
This type of scheme is coming under increasing levels of criticism from industry experts and consumers, some of whom may have fallen victim to such schemes, as currently there is no regulation imposed on sale and rent back. Companies will purchase a property from desperate home owners, who are often facing repossession of their home through arrears and defaults on their mortgage or home loan, at much less than full market value and then charge them full market value rent without any guarantee of long term tenure of the property.
The equity release trade body SHIP (Safe Home Income Plans) has now issued a checklist for anyone who may be considering such a scheme, which is designed to help them assess their options and ensure that they are not making the wrong decision. This comes after some sale and rent back schemes have been issuing misleading statements in their advertising, suggesting that they are equity release schemes, even though they charge rent and offer no guarantees to the home owner.
Andrea Rozario of SHIP said “Whilst we acknowledge that there may be some ethical sale and rent back companies, we are concerned about the number of providers who are making misleading claims in their advertising. We have devised this checklist to help consumers and advisers of some of the key risks and implications of these products and also their rights in order to make an informed decision.”
Meanwhile, the Office of Fair Trading (OFT) is conducting an investigation into sale and rent back schemes with a view to introducing regulation by the Financial Services Authority (FSA), the results of which are expected to be announced later this month.
