Best Loans News

Over the course of the past few months, we have reported on a number of occasions about sale and rent back schemes which are operated by an increasing number of companies and are becoming ever more popular with homeowners facing financial difficulties on their homeowner loan, or other secured loan, particularly in the current economic climate.

Sale and rent back schemes allow homeowners who may be in arrears on their homeowner loan and possibly facing repossession by the lender, to sell their home to a provider, at a discounted price, and then rent it back from the same company.

However, many of these companies have been investigated by the Office of Fair Trading (OFT), due to tenants being evicted from their homes due to large rent increases, having sold their home in the first place for much less than its market value, in many cases only just clearing the loan on the property.

Following the OFT’s investigation and several complaints from consumers, the Financial Services Authority (FSA) has eventually announced that it is to introduce regulation to this controversial sector and that any company offering sale and rent back schemes must be authorised to do so and operate within the regulations.

The initial stage of regulation is likely to be introduced as early as July this year, which will deal with the main problem areas of the sector, with full regulation to follow sometime in the second quarter of next year.

This regulation can not come soon enough to protect an extremely vulnerable sector of homeowners, who are in a desperate situation with loan arrears and threats of repossession and should help to remove some of the less reputable firms from this business, enhancing the image of sale and rent back schemes.

Although this is good news for homeowners going forward, it will be little comfort for all those individuals who have previously fallen victim to these schemes, who have ended up losing everything, just to get out of a difficult spot with arrears on their homeowner loan.