OFT: Sale and rent back companies need regulation

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OFT: Sale and rent back companies need regulation

Wed 15th Oct 2008

Firms handling sale and rent back deals need statutory regulation as some customers are misled, the Office of Fair Trading (OFT) has said.

In a report on the sale and rent back market, the OFT found that some consumers take such deals when it is not in their best interests and may be misled by companies about the value of their property or their security as tenants.

Furthermore, they can suffer sharp rises in rent or even be evicted after a short time, or risk losing their home if the landlord fails to pay the mortgage.

The OFT called for regulation of the market by the Financial Services Authority and for customers to be made aware of free, independent advice as well as receiving redress if firms do not keep their commitments.

David Harker, chief executive of Citizens Advice, welcomed the study's findings, pointing out that bad practice could cause "huge financial and emotional loss".

He said consumers need "robust and binding safeguards" that only protection in law could provide.

The Council of Mortgage Lenders agreed that greater protection is required.

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