OFT Calls for regulation of sale & rent-back

The Office of Fair trading, has today published a report calling for statutory regulation of the sale and rent back sector with better protection for consumers.

The full report can be downloaded from the OFT Website Download Sale and rent back - an OFT market study (pdf 494 kb).

Key points arising in the report are:

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.

John Fingleton, OFT Chief Executive, said:
'Our research shows that sale and rent back deals have potential to cause serious and permanent harm to often vulnerable homeowners. The unfamiliar and highly pressurised situations that these people find themselves in may leave them particularly vulnerable to misleading statements or valuations from sale and rent back firms looking to make a deal.

'Even those customers for whom sale and rent back might be the best option could be unaware they are currently bearing almost of all the risks.

'Recommending statutory regulation is not something we do lightly or often, however in this case we consider it necessary to put a stop to the unacceptable behaviour of some sale and rent back operators and to ensure consumers are better protected.'