More Protection Introduced For Sale And Rent Back Customers
A few months ago we reported on the proposed changes to the sale and rent back market, as the Financial Services Authority (FSA) announced that they were planning to introduce new regulation to cover this area of the housing market, in the same way that home owner loans and mortgages are regulated. The FSA introduced interim legislation last summer for companies who offer such schemes, but now it has announced the full set of rules which will be applied to sale and rent back schemes from the end of June this year.
Sale and rent back was introduced to help people who were struggling to keep up with their mortgage or home owner loan repayments to remain in their home. They were aimed at those borrowers who had a high level of arrears on their loan and were possibly facing repossession from their lender.
The schemes offered to buy the individual’s home, usually at a reduced price, but sufficient to repay the outstanding loan balance and loan arrears and then rent the property back to them. The problem with these schemes is that they generally target vulnerable and desperate people who are being threatened with repossession from their home owner loan provider, with no guarantees of secure tenure, or legislation to protect them.
The new FSA rules now mean that all firms who offer sale and rent back must be authorised and regulated. The new regulation places restrictions on advertising and sales techniques, allows customers a 14 day cooling off period, places a complete ban on cold calling and leaflet dropping, ensures that firms must give a guarantee of tenure to customers of at least five years, make appropriate checks to ensure that sale and rent back is right for the customer and make them fully aware, in writing, of the risks associated with these schemes.
