Government Interested in Sale and Rent Back Sector

There are many companies offering sale and rent back 'solutions' to home owners. As sellers are none the wiser about the finances of these companies, or too scared to ask at the time of sale, many have found that these companies fell into trouble with their own lenders.

Many companies either under pressure from lenders or via their own unethical practices, asked sale and rent back tenants to evit the properties months after making the purchadse and making long term tenancy promises.

This has alerted gvernment.

It asked Office of Fair Trading (OFT) to conduct a study into the sale and rent back sector. OFT will later decide whether this sector needs to be regulated by a watchdog such as the Financial Services Authority (FSA), just like the residential mortgage industry is.

Government anticipates that as credit crunch bites deeper into the economy, more and more homeowners will run the risk of repossession and therefore seek alternative ways of selling their property. One obviuos way is sell and rent firms.

The results from the OFT study are expected in September.

Although some SRB firms have opposed government's move, this website wholly supports OFT's study, especially if this helps flushing out the rogue traders. This is because one bad apple gives bad name to the majority of ethical providers of what essentially is a service. And these rough traders are tarnishing the image of genuine sale and rent back providers.

Lack of regulation leaves clients vulnerable to elements. At th least there must be a best practice guide that SRB firms must adhere to. That is the only way clients will feel comfortable doing business with.

02 Sept 2008

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