Pensioners Being Targeted By Rent Back Schemes
We reported last week about the growing concerns and dangers associated with sale and rent back schemes for individuals who are in financial difficulty and wish to remain in their homes. Now one home reversion plan arranger has raised concerns that many of these unregulated companies are preying on some of the most vulnerable members of society, retired people with inadequate pension provision, but who still own their own home.
The concerns have been raised by Michael Holt of SYH Charterhouse, who specialise in regulated home reversion schemes. His major concerns were that once an individual has sold their property to a rent back company, they often lose the right to remain in the house, due to the tenancy not being secure enough and many providers include terms and conditions within the contract which are designed to drive people from their homes through eviction.
Mr Holt also said that a better option for many would be to take out a home reversion plan, or some other form of equity release scheme which is regulated by the Financial Services Authority (FSA). The proceeds from this type of plan may be used for any legal purpose, whether this is to provide funds for luxuries, ongoing day to day living costs, or to repay any existing loans or mortgages which may be outstanding.
Many individuals do not appreciate the difference between equity release schemes and sale and rent back schemes. Andrea Rozario, Director General of Safe Home Income Plans (SHIP) said their main priority was to campaign for the regulation of rent back schemes and also to raise public awareness to the differences between the two options.
If you are considering this type of scheme to boost you retirement income, or just to repay your loans or mortgage, in the first instance you should contact an independent financial adviser (IFA) with specialist knowledge in this area. They will be able to ascertain your current situation, taking into account your tax status and any state benefits which may be available to you and make appropriate recommendations from the whole of the market as to which is the best scheme (if any) to suit your particular needs. You can obtain a list of local IFAs from the FSA website at www.fsa.gov.uk
