Sale And Rent Back Moves One Step Closer To Regulation
We have reported on a number of occasions in the past on the controversial sale and rent back schemes which have been operated by a growing range of companies.
These schemes, in general, have largely been condemned for preying on extremely vulnerable homeowners who are struggling to keep up with the repayments on their homeowner loan or mortgage, many of whom have built up large amounts of loan arrears and face the prospect of repossession.
A sale and rent back scheme allows a homeowner to sell their property to a company, thereby clearing their loan debt and then rent the house back from the company, saving the individual from losing their home.
There have recently been a growing number of calls from industry officials in the housing and homeowner loan sectors to introduce regulation for this area of business, in order to protect consumers from some of the less scrupulous sale and rent back companies. Last year, the Office of Fair Trading (OFT) ran an investigation into sale and rent back and, following its findings, the government have conducted their own investigation, the results of which have just been published and includes proposed changes in legislation which will see sale and rent back schemes fully regulated by the Financial Services Authority (FSA).
The FSA will now publish its plans for regulation, which is expected to work on a two tier basis. Initial regulation will be introduced as early as July this year, in order to offer immediate protection to those individuals with large loan arrears who may be tempted to take this option, with full regulation being introduced by the second quarter of next year, once the final rules have been established.
Sale and rent back schemes have ended up causing many homeowners even more financial problems in the long term, as they offer no long term guarantee of residency and regulation of this sector is long overdue.
