OFT to investigate sale and rent back

The Office of Fair Trading is to investigate the controversial sale and rent back schemes that have come under increased fire over recent months. A market study is to be launched into the sale and rent back market, which is where a firm purchases a person’s home and then allows the former homeowner to rent back the property as a tenant. There are been a number of concerns raised over this scheme, such as consumers getting just a fraction of the property value and only being able to rent the property back for a limited time.

The popularity of sale and rent back schemes has been increasing over recent months, and this is because so many homeowners are now unable to keep up with their mortgage loan repayments. With house prices set to continue falling and house sales slumping many homeowners have no option but to turn to this type of scheme in order to avoid being repossessed.

A number of agencies have been calling for authorities to investigate sale and rent back schemes, and this includes the Council of Mortgage Lenders, the housing charity Shelter, and the Citizen’s Advice Bureau. One official from Shelter said: ‘This study is urgently needed, and comes on the back of vulnerable people losing their homes to some dishonest sale and leaseback companies.’

He added: ‘These companies encourage hard-up homeowners to sign up for what is plainly a very bad deal. Shelter has seen cases where homeowners have not only lost out financially after selling their homes to an sale and leaseback company, but also lack any right to permanently stay in their home and ultimately find themselves homeless. Shelter has called on the Government for regulation in this growing sector, and we hope the OFT study will offer the public improved protection against the hidden dangers of some schemes and ensure all sale and leaseback companies operate in best interests of consumers.’