OFT: Sale And Rent Back Needs Regulation
The sale and rent back deals need regulation with better protection for consumers, according to the Office of Fair Trading (OFT) study. The relatively new type of property transaction whereby firms buy homes from individuals at a discount, and then allow those individuals to stay on in the property as tenants, has caused serious harm to vulnerable homeowners.
The study found that:
- some consumers enter into sale and rent back transactions when this is not the best option for them
- some sale and rent back firms may mislead customers as to the value of their property or the security they have as tenants. This includes telling people they will be able to stay in their home for years, when in reality the tenancy may only be guaranteed for six to 12 months
- some firms impose substantial rent increases or even evict tenants after a short tenancy period. It is also possible that tenants may lose their homes if the landlord defaults on the mortgage, and
- some consumers are evicted because they cannot afford the agreed rent, which suggests staying in their property was not sustainable in the first place.
- there are upwards of 1,000 firms, together with an unknown number of non-professional landlords, who have conducted about 50,000 transactions to date.
Source: Sale and rent back firms need statutory regulation – OFT report
